Wisconsin poised to be energy exporter

From an article by Matt Hrody on NewsBuzz:

After the brownouts of the late 1990s, electric utilities in Wisconsin got serious about adding generating capacity. Although the new power plants that followed, including ones in the Milwaukee area, ultimately increased rates for customers, they could become a boon for them as the economy rebounds, according to the state’s new Strategic Energy Assessment. Wisconsin could become a leading exporter of electricity in the Midwest with profits helping to keep a lid on rates at home.

The Assessment, released earlier this week, projects that the state’s generating capacity will exceed demand in the state by 20 percent until 2015. The “reserve margin,” as it’s called, will peak this year at 26 percent. To the state Public Service Commission, which regulates electric utilities in the state and produced the report, the margin may be too large. “There is reason for concern,” it says, “when reserve margins are in excess of 20 percent.”

According to Charlie Higley, executive director of the state Citizens’ Utility Board, the costs for running and maintaining unneeded power plants, particularly older, less efficient ones that burn coal, are passed onto consumers.

The Commission suggests that the state’s excess capacity could become an opportunity. While Wisconsin has undergone a large build-up of power plants, other states haven’t. “Other states may not be as well-positioned with capacity in their near futures,” the report says, “and Wisconsin utilities may increasingly serve as energy exporters.”

Profits from those exports – wholesale power sales to municipalities or other customers throughout the Midwest – must be used to pay for rising fuel costs, according to Higley. Fuel costs are a major driver of rate increases, which could be offset by an increase in wholesale profits.

The Commission agrees. “While this market is evolving, the opportunity exists for excess generation sales to benefit ratepayers,” the report says.

“Any profit is returned to ratepayers, and that’s fine with us,” says Higley, but neither he nor the Commission yet knows how large the returns could be.