Re: Madison Gas and Electric Company

Abstract

The Wisconsin Public Service Commission's August 8, 1974 decision to restructure the rates of the Madison Gas and Electric Company was an effort to obtain the optimum allocation of resources as part of a general rate increase proceeding. This new system was implemented through time-of-day metering to create price differentiation for on- and off-peak sales in a way that would best allow the prices of the utility's goods and services to equal their marginal costs of production. The goal was for customers to be accurately charged for energy consumption as measured by the cost actually imposed on society, while simultaneously being rewarded for shifting their energy use to off-peak times to improve the utility's load factor. The Commission determined that taxation in such a way would be the most appropriate way to recognize externalities in the rate-making process.