THE FOLLOWING IS AN UPPCO NEWS RELEASE
Upper Peninsula Power Company (UPPCO) today announced the Michigan Public Service Commission (MPSC) approved the settlement that was reached in its rate case.
The approved settlement adjusts the rates being charged to all customers to reflect the cost of service, returns the full benefit of the Federal Tax Cuts and Jobs Act of 2017, captures cost reductions achieved by UPPCO for energy purchases, recovers investments being made in the Smart Energy advanced metering infrastructure project and increases the cap for customer-owned distributed generation to 2%.
“It was encouraging that all eight parties in the case were able to reach settlement,” said Jim Larsen, UPPCO’s Chief Executive Officer. “Overall, UPPCO has reduced rates for residential customers by 12% and Industrial customers by 33% since the last rate case, 3 years ago. This case consolidates many of those savings and simplifies the rates being charged by the Company.”
“As a state-regulated utility, the Company routinely submits regulatory filings to the MPSC to comply with Michigan’s laws and regulations,” said Brett French, UPPCO’s Vice-President of Business Development and Communications. “Under the approved settlement, a typical residential customer that consumes 500 kilowatt hours of energy per month will save approximately $2.00 off their monthly energy bill. Commercial and some industrial customers will see moderate increases in their rates; however, the new rates are still lower than the rates that were approved by the MPSC in 2014. Overall, these reductions reflect the Company’s continued efforts to stabilize rates and provide increased value to our customers.”
The MPSC approved settlement also includes the Company’s advanced meter reading infrastructure project. “Our Smart Energy project is designed to improve upon reliability, deliver increased customer service and eliminate the current practice of reading meters every other month,” said French.
The new rates will go into effect beginning with the June billing cycle.
THE FOLLOWING IS FROM THE MICHIGAN PUBLIC SERVICE COMMISSION
The Michigan Public Service Commission today approved a settlement that lowers electric rates for most residential customers of Upper Peninsula Power Co.
Rates will decrease starting in June for approximately 40,000 customers. That means a savings of 1.55 percent, or $1.76 per billing period, for those who use 500 kilowatt hours a month. About 3,300 other residential customers will see their rates increase since UPPCO is combining its two residential rate schedules and eliminating the Iron River District. Customers who live in Iron River, Stambaugh, Caspian, Gaastra, Mineral Hills, and the surrounding areas and use 500 kilowatt hours a month will see their bills go up 2.3 percent, or $2.51, beginning next month.
Commission approval of the settlement allows UPPCO to raise its rates by $1.8 million (Case No. U-20276), which is just 18 percent of the $9,982,604 the company sought when it filed its request with the MPSC in September 2018. UPPCO is also ending a $3.324 million refund from the federal Tax Cuts and Jobs Act’s lower corporate tax structure, which has now been reflected in its new rates.
Residential customers will see base rates decline up to 5.18 percent, commercial rates will increase 14.11 percent, and industrial rates will rise 9.34 percent. In UPPCO’s rate application, the utility proposed rebalancing costs between residential and business customers, which benefits U.P. families. Overall, the new rates are 1.97 percent higher than those approved in UPPCO’s most recent rate case in September 2016 (Case No. U-17895).
All parties to the settlement – UPPCO, Commission Staff, the Department of Attorney General, Citizens Against Rate Excess, Calumet Electronics Corp., Verso Corp., Energy Michigan Inc., and the Association of Businesses Advocating Tariff Equity — signed the agreement May 6. There was no opposition to the settlement.
Under the settlement, UPPCO has agreed to spend at least $4.9 million this year on advanced metering infrastructure to increase meter reading accuracy and operational efficiencies. If less is spent, the difference will be refunded to customers. The utility must file with the Commission an annual report on project benefits including meter reading and services, outage management, and customer care. Once all meters are installed, UPPCO must perform a system load study.
In a future filing, UPPCO is to request a six-month extension of the monthly meter reading and testing waiver the MPSC granted in Case No. U-20271. The current waiver is due to expire March 31, 2020, and the company is requesting the deadline be extended to Sept 30, 2020.
UPPCO has agreed to expand the size of its net metering and distributed generation program to 2 percent of its average in-state peak load for the preceding five years. Under distributed generation, customers produce their own electricity using renewable resources and can receive a credit from their local utility for the power they produce but don’t use onsite. A customer’s outflow credit, how much UPPCO will pay for the energy not used on location, will equal the power supply component of the customer’s rates. Customers participating in the distributed generation program will not pay a system access contribution charge.
To improve service reliability, the company must spend $13.7 million annually to clear vegetation from around at least 372 miles of wires on its distribution network. If the mileage goal is not reached, the company must refund to customers the difference between how much was spent and the targeted spending amount. UPPCO also must file an annual report with the MPSC on tree trimming expenses and how many miles of lines were cleared.
Upper Peninsula Power Company Co. Case No. U-20276 Fact Sheet
- Revenue increase granted: $1.8 million.
- Return on common equity (ROE): 9.9 percent.
- Capital mix: 54 percent equity to 46 percent debt.
- Overall rate of return: 6.91 percent.
- The power supply cost recovery base rate is set at 42.90 mills per kilowatt hour at the generation level, or 45.57 mills per kilowatt hour at the sales level and the maximum authorized 2019 PSCR factor will be zero mills per kilowatt hour.
- UPPCO will perform a minimum distribution system study that looks at what’s needed to serve its customers and it will include the study results in its next general rate case filing.
- The company must spend at least $13.5 million annually on distribution system capital expenditures.
- The state reliability mechanism capacity charge of $90,810 per megawatt year, or $249 per megawatt day, as established by the Commission in November 2017 (Case No. U-18254), will remain in effect. The charge is the amount that would be collected from customers of alternative electric suppliers if those suppliers don’t have enough power to serve anticipated needs.
To look up cases from today’s meeting, access the eDockets filing system here.
To watch a livestream of the MPSC’s meetings, click here.
For information about the MPSC, visit www.michigan.gov/mpsc, sign up for one of its listservs, or follow the Commission on Twitter.
THE FOLLOWING IS FROM ATTORNEY GENERAL DANA NESSEL
Michigan utility ratepayers will save more than $11 million in total thanks to settlement agreements reached by Michigan Attorney General Dana Nessel with Upper Peninsula Power Company (UPPCO) and two other Michigan utilities.
The settlements were approved today by the Michigan Public Service Commission (MPSC).
“In this never ceasing rate increase climate for essential goods and services, I am happy to be able to reverse this trend for Upper Peninsula Power Company, Michigan Gas Utilities Corporation and Upper Michigan Energy Resources Corporation electric and natural gas customers,” said Nessel. “This is much needed relief – especially UPPCO electric residential customers, who have been facing some of the highest electric rates in the state.”
The Upper Peninsula Power Company filed a rate increase application with the MPSC in September 2018 seeking to increase its rates by nearly $10 million, impacting more than 54,000 customers across the Upper Peninsula. In addition to UPPCO’s request to increase rates, the company also sought increases in the monthly service charge for residential customers by $10 a month, small commercial customers by $33 month, and medium-size commercial customers by $25 a month.
Attorney General Nessel intervened in the case in February, arguing that the rate increase and monthly service charges were exorbitant – especially considering the already high electric rates being paid by UPPCO customers.
Upon further investigation and litigation, and working the Michigan Public Service Commission staff and Citizens Against Rate Excess (CARE), Nessel signed a settlement reducing the $10 million request to $1.8 million, eliminating the monthly service charge increases for all customers and decreasing residential customers’ base rates by 4.5 percent. This needed rate decrease comes at the same time a current refund from a separate case ends.
In separate orders, the MPSC also approved settlements with Michigan Gas Utilities Corporation (MGUC) and Upper Michigan Energy Resources Corporation (UMERC). In both cases, AG Nessel intervened and was able to increase refunds to both natural gas and electric customers of these two companies. In MGUC’s case, Nessel was able to increase the refund to customers by $3 million; the refund in UMERC’s case was increased by $50,000.
