As utilities back bigger fixed fees, consumer groups bite back
As utilities lobby state regulators to include mandatory fixed fees on their customers’ monthly bills, consumer advocates and environmental groups are pushing back.
A mandatory fixed fee, which is also called a surcharge or a cost tracker, is an additional fee imposed on a customer’s utility bill above and beyond the base rate charge for utility service. It is like a “flat tax” collected by the utility from every customer. In the past, utility regulators rarely approved fixed fees unless they were necessary to protect a utility’s financial health from the impact of forces outside of the utility’s control. Think oil prices.
In recent years, electric utilities have proposed mandatory fixed fees to pay for everything from investments in new natural gas pipelines to environmental compliance costs. Indeed, the National Regulatory Research Institute has described the use of cost trackers and surcharge mechanisms as the “latest trend” in the utility industry.
Consumer groups like the AARP claim that increasing mandatory fixed fees imposes disproportionately higher costs on customers who use the least electricity. Environmental groups like the NRDC argue that fixed fees remove incentives to conserve energy.
These are among the arguments being made in Wisconsin, where two utilities are battling it out with consumer advocates and environmental groups over proposals that would raise mandatory fixed fees.
In Wisconsin, Xcel and Wisconsin Public Service Corporation (WPS) are asking state utility regulators to raise the monthly mandatory fees paid by customers. Xcel wants to raise the fee from $8 per month to $18 per month. WPS is trying to raise the fixed fees paid by its customers from $19 to $25 per month. Last year, utility regulators in Wisconsin PSC approved three requests made by utilities to increase existing mandatory fees.
Wisconsin’s utility regulators are actually bucking the national trend. In the majority of states, utility regulators have rejected or significantly reduced surcharge requests from utilities.