Understanding WPS fixed costs

Bringing energy to our customers requires a network of meters, poles, transformers, substations and more, forming the electric grid. The costs to maintain and repair these items, as well as to perform all associated processes (billing, customer service, accounting, etc.) does not change with the amount of energy a customer uses. In other words, these costs are fixed.

WPS and other utilities had historically included most of the fixed costs in a Volumetric Energy Charge — or the charge customers pay per kilowatt-hour of electricity or therm of natural gas they use.

The result is that customers who use less electricity or natural gas, such as those with rooftop solar systems, are not paying the same share of fixed costs as other customers. This unfairly shifts fixed costs to customers who use more energy or who do not have a self-generation system. Both types of customers use the electric grid, and we believe everyone should pay their fair share to maintain the grid.

Learn why WPS proposed a new pricing structure.

View Video

Fixed cost pricing

For 2016, the Public Service Commission of Wisconsin approved an increase in the WPS residential electric Fixed Charge from $19 to $21 monthly. Even with the increase in the fixed charge, the overall cost of electricity to customers decreased because the volumetric (use) rate dropped. The natural gas fixed charge remained at $19 monthly.

This increase in the electric Fixed Charge helps to move WPS rates closer to reflecting the actual cost of service (more than $50/month for residential customers) and that fixed costs are recovered fairly.

Typical residential customers (who use about 600 kilowatt-hours, or kWh, of electricity monthly) and the average small business customers' overall monthly bills won't be affected by the rate structure change. While the Fixed Charge increases, the price per kWh or therm decreases.

For years, rural cooperatives have included higher fixed charges on their bills — in the $25-$35 range and higher.

WPS cost-of-service studies found that because limited-income customers often cannot afford home improvements or high-efficiency appliances to conserve electricity, their energy use is often the same or higher than that of a typical residential customer. Since the volumetric rate has decreased, limited-income residential electric customers of WPS, as a group, may pay less under the new rate structure.

Electricity is an essential service that powers our homes, businesses and communities. Even with this change, WPS will continue to meet customer needs at a Fixed Charge of less than $1/day.


WEC Energy Group