Madison Gas and Electric proposed a customer refund Thursday of payments made last year that are subject to the approval of the Wisconsin Public Service Commission.
If passed, the refund will be applied to customers' bills by the end of March. The average refund will be $12.50, but the range will be all over the map ... some businesses may get thousands,"" according to MGE spokesperson Steve Kraus.
According to MGE, the refunds will be calculated proportionally to the customer's utility use. The rebate accounts for the declining fuel costs in the past year. By law, MGE must fix their prices a year in advance; that is, ""the gas you're using today wasn't purchased today,"" PSC spokesperson Teresa Smith said.
MGE's cost estimates, and customers' bills, proved higher than the actual fuel prices. MGE allows for a small margin of error above or below the estimated cost. However, if the margin exceeds a certain amount, MGE will file for a refund of the surcharge.
The fuel to generate electricity is a large part of MGE's budget; therefore they must account for fluctuating fuel prices with retroactive refunds. MGE can also charge a surtax to compensate for unexpectedly high fuel prices.
""2008 was very volatile,"" Kraus said. ""Fuel prices went down, so [MGE] overcharged.""
PSC acts as a price regulator, and it will review MGE's proposal in the upcoming weeks. The commissioners will ""deny, amend, modify"" or approve the refund, Smith said.
PSC audits MGE's records and judges whether or not a credit or surcharge is due. Kraus expects PSC will approve the refund and believes PSC's approval process is the fairest way to account for changing fuel prices. In a constantly changing market it is ""too difficult to look ahead,"" Kraus said.
