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Wisconsin Industrial Energy Group Annual Business Meeting Brett Favre’s Steakhouse June 24, 2010

Wisconsin Industrial Energy Group Annual Business Meeting Brett Favre’s Steakhouse June 24, 2010. Overview. Introduction Costs/Rates/Jobs Global Warming Task Force Bill Legislative Session Summary Future Costs, Economic Survival Next Steps – Coalition Efforts. Introduction.

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Wisconsin Industrial Energy Group Annual Business Meeting Brett Favre’s Steakhouse June 24, 2010

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  1. Wisconsin Industrial Energy Group Annual Business Meeting Brett Favre’s Steakhouse June 24, 2010

  2. Overview • Introduction • Costs/Rates/Jobs • Global Warming Task Force Bill • Legislative Session Summary • Future Costs, Economic Survival • Next Steps – Coalition Efforts

  3. Introduction • #1 state per capita manufacturing jobs • #1 state for paper & #3 state for foundries • Among the highest % of coal-fired generation • Currently among highest electric rates in the Midwest • Currently way more electric supply versus electric demand (30%) – no need to build anything

  4. Costs/Rates • WIEG members often spend $1 million or more on their monthly electric bill • Since 2003, industrial electric rates have increased between 40% to over 100% in Wisconsin • Our electric rates were once among the lowest in the country, but are now among the highest in the Midwest

  5. Current & Future Costs Generation ~$4 billion Transmission ~$3 billion 10% Renewable ~$5 billion Environmental ~$4 billion Total $16 billion *$5.5 billion collected annually in rates

  6. Global Warming Task Force In reality was a 4 year fight - changes then made to WIEG paid big dividends now • Changed some duties & consultants; greater legislative focus than in past • Hired new executive director • Act 141 passed with cost off-ramps, industrial caps & self-directed

  7. Global Warming Task Force In 2007, the politics shifted after elections – the ink wasn’t dry on Act 141 when big policy shifts were announced • Gov. Doyle creates Global Warming Task Force • New Mercury Rule (CAMR) was introduced • Sale of Point Beach nuclear plants

  8. Global Warming Task Force In 2008, the politics shifted further and huge expenses were on the way • Task Force final recommendations • Power the Future $105 million settlement regarding water permits – legally obligated to lobby for 25% renewables mandate • Massive WEPCO rate hike approved, but industrials caught a break on COSS

  9. Global Warming Task Force In 2009, the plate was full and WIEG was playing defense on several fronts • PSC opens up at least five global warming task force related dockets • Fuel Rules battle results in compromise, but no law change (stalemate in 2009) • Commission was forced to reverse itself on making WPSC lobby for 25% renewables mandate • Bent Tree wind farm suit

  10. Governor’s Global Warming Task Force Legislation – Original Bill • 25% by 2025 renewables mandate • Advanced Renewable Tariffs (ARTs) • Increase Public Benefits contributions • “Relax” Nuclear Moratorium • Annual Boiler Inspections • Non electric provisions: • Low Carbon Fuel Standard • Building Codes • “California Cars”

  11. 2009 – 2010 Legislative Session WIEG Accomplished Major Legislative Goals • Killed global warming bill/“Clean Energy Jobs Act” • Added cost containment to current 10% renewables (RPS) law • Enacted compromise Fuel Rules legislation

  12. 2009 – 2010 Legislative Session Other Energy Legislation WIEG Lobbied: • AB 755 (Rep. Mason) would have applied labor standards to Public Benefits programs, but was killed • Wind siting reform (Act 40) • “Green to Gold” (Act 332) energy loan program • Proposed early sunset of District Attorney tax on utility bills

  13. Global Warming Bill Costs/WIEG Savings WIEG members directly saved in avoided costs: • $115 million annually overall with defeat of AB 649 • $20 million annually for just the current Act 141 caps versus AB 649 • $.5 million with just current law + Act 141 caps *Note: The PSC says AB 649 would have saved customers billions

  14. Economic Survival • The state lost 164,000 manufacturing jobs • Factory employment in Wisconsin is now at lowest levels; more government employees than manufacturing jobs • 21% of workforce in manufacturing in 1999 – 18% of workforce in 2006 • Manufacturing pays 26% more than the average private sector job

  15. Economic Survival If rates get too high, companies may fail, leave or be unable to expand and grow • Internally - we need to control costs with conservation and efficiency measures • Externally - we need to influence the policy debate: ask what is the cost/benefit? • Form business coalitions and talk to your state legislators

  16. Next Steps Need to keep global warming coalition active and figure out how to better align business & utility interests • Over 50 business groups opposed to global warming bill • Five core groups: Cast Metals, Food Processors, WIEG, WMC, Paper Council • Legislation, Rate Cases, PSC Dockets

  17. Next Steps Questions to answer: • How can we maximize past energy investments for competitive advantage? • What is the “sweet spot” and can we coast off of these investments for a few years? • Can we maximize spending on Public Benefits/Focus on Energy? • What is “right” amount of renewables & efficiency?

  18. Next Steps - Regulatory Always have rate cases to fight and have major PSC dockets pending: • Retirement of coal docket • “Innovative Rates” • Increased energy efficiency spending studies • Demand Response/Load Management • Small scale renewables

  19. Next Steps - Legislation Depends a great deal on the next election and who is in charge • Clean Energy Jobs Act probably dead • What is the “right” amount of renewables? • What is the “right” amount of efficiency? • Expanded economic development tariffs? Tighter cost/benefit laws?

  20. Summary/Conclusion • Introduction • Costs/Rates/Jobs • Global Warming Task Force Bill • Legislative Session Summary • Future Costs, Economic Survival • Next Steps – Coalition Efforts

  21. Questions?

  22. Wisconsin Industrial Energy Group Annual Business Meeting Brett Favre’s Steakhouse June 24, 2010

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