On Oct. 26, 2016, the PSCW verbally approved an electric rate increase of approximately $22.5 million, or 3.2 percent, and a natural gas rate increase of $4.8 million, or 3.9 percent. The difference between the Staff’s recommendation and the PSCW’s approved electric increase is attributable to an increase in forecasted fuel and purchased power expense. Consistent with long-standing PSCW policy, these costs were updated prior to the PSCW’s decision to reflect current market forecasts. The PSCW approved NSP-Wisconsin’s requested natural gas rate increase consistent with the Staff’s recommendation.

The major components of the retail electric rate increase, the Staff’s recommendation, and the PSCW’s approval are summarized below:



Electric Rate Request (Millions of Dollars)	NSP-Wisconsin Request			Staff Recommendation			Final Decision
Rate base investments	$	11.0		$	7.6		7.6
Generation and transmission expenses (excluding fuel and purchased power) ^(a)	6.8			6.1			6.1
Fuel and purchased power expenses	11.0			7.7			10.7
Subtotal	28.8			21.4			24.4
2015 fuel refund ^(b)	(9.5		)	—			—
Department of Energy settlement refund	(1.9		)	(1.9		)	(1.9		)
Total electric rate increase	$	17.4		$	19.5		$	22.5

^(a)

Includes Interchange Agreement billings. The Interchange Agreement is a Federal Energy Regulatory Commission (FERC) tariff under which NSP-Wisconsin and its affiliate, NSP-Minnesota, own and operate a single integrated electric generation and transmission system and both companies pay a pro-rata share of system capital and operating costs. For financial reporting purposes, these expenses are included in operating and maintenance (O&M).

^(b)

In July 2016, the PSCW required NSP-Wisconsin to return the 2015 fuel refund directly to customers, rather than using it to offset the proposed 2017 rate increase, as originally proposed by NSP-Wisconsin. This decision, when combined with the increase in forecasted fuel and purchased power expense, effectively increases NSP-Wisconsin’s requested electric rate increase to $29.9 million, or 4.2 percent.