CLICK TO HEAR COMMENTS FROM MPSC CHAIRMAN DAN SCRIPPS
The Michigan Public Service Commission today approved a settlement agreement that allows the transfer of ownership of Upper Peninsula Power Co. (UPPCO), which serves about 52,000 electricity customers across the U.P. (Case No. U-20995).
Axium UP Holdings LLC and Lake AIV LP filed an application Feb. 26, 2021, seeking Commission approval of Axium’s purchase of 100% of outstanding common stock in Upper Peninsula Power Holding Co., which owns all outstanding common stock of UPPCO, and a transfer of ownership of the holding company and UPPCO from Lake AIV to Axium. Axium is an affiliate of Axium Infrastructure, a portfolio investment firm that invests in infrastructure assets and has more than $4.2 billion in assets under management and $1.1 billion in co-investments.
The Michigan Attorney General’s Office intervened in the case, and MPSC Staff participated. Under terms of the settlement agreement, which resolves all issues in the case:
- Existing rates will not be impacted, and Axium will not seek to recover sale transaction costs from UPPCO customers;
- No workforce cuts are expected, and Axium commits to honoring collective bargaining agreements and existing pay and benefits for 24 months, maintaining the utility’s current offices, and continuing existing charitable contributions for at least five years.
- UPPCO agrees not to request an adjustment to base rates that would take effect before Jan. 1, 2023, unless the company must do so because corporate income tax rates increases.
- Axium is directed to move expeditiously to implement its debt refinancing plan, which will benefit customers both through long-term stability and by the lower interest rate that reduces financing costs.
- Axium agrees to increase the discretionary cap on its distributed generation program from 2% to at least 3% of its average in-state peak load.
- In its next rate case, UPPCO will include proposals to address Upper Peninsula Energy Task Force Committee recommendations for an electric vehicle charging station pilot program; alternative pilot tariffs and/or rebates applicable to building electric space heating and water heating, and a low-income residential customer pilot tariff in consultation with Staff and the Attorney General; and
- Axium will forgive 20% of the bad debt booked to the company’s COVID-19 deferred asset account, which shall be borne by shareholders and not recovered from ratepayers. UPPCO will propose an arrears forgiveness program, in consultation with the Staff and the Attorney General, within 90 days from the execution of the settlement agreement to apply the 20% of bad debt to customer arrearages.
UPPCO PRESS RELEASE
Upper Peninsula Power Company (UPPCO) announces the Michigan Public Service Commission (MPSC) and the Federal Energy Regulatory Commission (FERC) have approved the transfer of the company’s stock to an affiliated entity of Axium Infrastructure US Inc. (“Axium”).
Axium is an independent portfolio management firm that is dedicated to long-term investments, including utility infrastructure and renewable energy assets. An application was filed with the MPSC on February 26, 2021 seeking approval of the transfer. The application was approved after settlement was reached with the MPSC and the Attorney General’s office.
“With this change in investors, UPPCO is well positioned to develop new renewable solar and wind energy resources that will further benefit our customers and the Upper Peninsula,” said Jim Larsen, UPPCO’s Chief Executive Officer. “The future continues to be bright as we remain focused on providing safe, reliable energy to our customers while increasing our focus on renewable energy.”
The sale is expected to close in June 2021. All regulatory approvals required for closing have been received.
“UPPCO’s experienced management and operations team, headquartered in the Upper Peninsula, will remain in place after the transaction closes ensuring it’s business as usual,” explained Brett French, UPPCO’s Vice President of Business Development and Communications. “Our customers, employees, and day-to-day operations will be largely unaffected by this change in ownership.”
UPPCO is the Upper Peninsula’s largest electric utility serving approximately 52,000 customers across 4,460 square miles. UPPCO and its predecessors have excelled at providing dependable service and safe, reliable energy to its valued customers for more than 135 years.
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