The Citizens Utility Board of Wisconsin has locked horns with We Energies several times in recent months. But last week a Milwaukee business group, whose board of directors includes We Energies chairman Gale Klappa, pushed the state to neutralize the advocacy group with budget cuts.
“We first heard of the motion the day of the hearing,” said Kira Loehr, executive director and general counsel for the Citizens Utility Board of Wisconsin. “It was like a slap in the face.”
The cuts, she said, "will make it very difficult for CUB to survive." And if CUB is shut down, she said, "The only ratepayer advocates that would be left are the large industrial customers."
CUB has been advocating on behalf of residential and small ratepayers for 35 years. But its future was abruptly put in jeopardy on April 15 after the legislative Joint Finance Committee, which is currently re-writing Gov. Scott Walker's 2015-17 state budget, voted 12-4 along party lines to kill its funding.
The Metropolitan Milwaukee Association of Commerce proposed the measure to repeal a $300,000 annual grant for CUB, which the group has received for the past four years.
CUB, along with other advocacy groups, also has had access to a $750,000 fund to pay for outside witnesses, experts and lawyers. The measure passed by the Joint Finance Committee requires those groups to pay half the cost.
Prior to winning the $300,000 grant five years ago, CUB's only sources of funding were donations, which amount to about $135,000 a year, and the witness fund, which it had access to since 1983.
“It’s going to cripple the organization,” said Loehr. "There is no funding left for CUB to hire outside witnesses and lawyers, except for membership contributions, which are not enough."
We Energies is at the center of a dispute over a PSC-approved plan to charge ratepayers 92 percent of the cost of an $80 million conversion of the Valley Power Plant from coal to gas, while only 8 percent — $6.4 million — will be shouldered by 450 steam customers.
In addition, electric ratepayers will be on the hook for all $185 million for increases in electricity market rates, even though those increases would result solely from demand by the steam customers.
CUB filed the lawsuit against the Public Service Commission last year over the commission’s decision to allow the plan.
While the Milwaukee business group was behind the effort to kill CUB's funding, We Energies isn't taking sides, a spokesman said.
"We weren’t involved in the drafting of the motion and we don’t have a position on the vote that took place," said spokesman Brian Manthey.
Asked if Klappa, who sits on the MMAC's board, backed the funding cuts, Manthey said, "Not that I’m aware of. At this point it was the MMAC decision to go that route."
But the attack on CUB follows other high-profile clashes the group has had with We Energies, noted Utility Dive, a web-based publication that follows the utilities industry.
Last year CUB opposed We Energies' plans to raise fixed rates and pay less for electricity generated by rooftop solar panels, which were approved by the PSC.
And CUB has strongly opposed We Energies' plans to acquire the Wisconsin Public Service Corp.
Steve Baas, MMAC’s vice president of government affairs, said CUB’s lawsuit was only “one example” of why his group proposed the motion.
In an email, Baas said that "the state's preferential financial treatment of CUB places all other ratepayer voices at a disadvantage before the PSC."
"The reforms adopted by the Finance Committee," he said, "level the playing field for all ratepayer groups."
But at the April 15 JFC hearing, Rep. Chris Taylor, D-Madison, said the reason CUB was funded in the first place was to counter the influence of deep-pocketed utilities.
"This is not about fairness, this is about creating an unequal playing field," Taylor said. "The public doesn’t have money. They’re no match for utilities."
Rep. Gordon Hintz, D-Oshkosh, noted that utilities spend millions on lawyers, but the costs are simply passed along to consumers.
“And yet we are limiting the PSC’s ability to bring in counter voices that ... advocate on behalf of ratepayers and consumers,” he said.
Republicans countered that CUB funding encourages frivolous actions before the PSC.
“I think it’s going to eliminate some harassment of private businesses and utilities,” said state Rep. Michael Schraa, R-Oshkosh.
JFC co-chair Sen. Alberta Darling, R-River Hills, said the cuts will make advocacy groups think twice about bringing actions that "might not have merit."
“I don’t expect all of you to say this is a great idea,” she said, “but for some businesses it is a good idea.”
Loehr disputed the characterization by Republicans of CUB as a frequent litigant.
“CUB is very rarely in court,” she said. “That’s one of the things the Joint Finance Committee got wrong. CUB does not sue any businesses and only rarely appeals decisions of the Public Service Commission that we believe violate the statutes.”
She said the group typically advocates before the PSC on behalf of consumers.
“When the commission accepts our recommendations, then rates are reduced,” she said.
The move to gut CUB’s funding comes despite a unanimous decision in December by the three-member PSC — two of them appointed by Republican Gov. Scott Walker — to award the $300,000 grant to CUB. In awarding the grant, the PSC called CUB’s work on behalf of residential, agricultural and small-business ratepayers “exemplary.”
“CUB is one the Commission’s most active interveners, providing professionalism to all the cases in which it participates,” the PSC wrote in the order awarding the grant. “Equally, as a grant recipient, CUB has been forthcoming, prudent, and worthy of this nominal award, and the benefits of this grant can be shown in the increased and beneficial participation of CUB in Commission cases since 2011.”
The cut, if it remains in the budget, also comes at a time when Wisconsin rates rank highest in the Midwest, according to the U.S. Energy Information Administration.
CUB estimates that its advocacy has saved ratepayers nearly $3 billion since 2008, $161 million in 2014 alone.
Said Loehr of the budget cut, “It would gut the consumer’s voice in front of the Public Service Commission at a time when rates are already high and going to be going higher.”