Wisconsin has some of the highest electricity prices in the nation, although the average customer spends far less on electricity than in most states.
The average residential price for a kilowatt of electricity was 10.67 cents in 2016, according to numbers released this week by the U.S. Energy Information Administration. Only 15 states had higher residential rates, a reversal from 20 years ago, when Wisconsin had the 14th lowest rates in the nation.
Commercial rates are 15th highest in the nation, while industrial rates are 18th.
So why are Wisconsin’s rates so high?
“Built-in costs,” said Gary Radloff, director of Midwest Energy Policy Analysis for the Wisconsin Energy Institute. “It’s a combination of legacy infrastructure and legacy business models.”
Utilities have invested heavily in power plants and transmission lines — such as the CapX2020 and Badger Coulee projects through western Wisconsin — that are paid off over decades through customer rates set by the Public Service Commission.
In 2013, a group of Wisconsin utilities agreed to spend $1.2 billion to upgrade coal plants to settle a case brought by the Environmental Protection Agency over emissions of sulfur dioxide and nitrogen oxide.
The PSC acknowledged rising rates in its last statewide energy assessment, though the report said investments are necessary to replace aging facilities and comply with federal regulations. The regulatory agency says it is continuing to investigate ways to mitigate rate increases and suggests customers can offset the impact by conserving energy.