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A settlement on a request to increase electric rates by the Upper Peninsula Power Company means most electric utility customers will see their power bills drop slightly while a few will see a slight increase.
The agreement was approved Thursday by the Michigan Public Service Commission after there was no opposition to the settlement signed by all parties involved (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) on May 6th.
“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.”
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.
“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.”
UPPCO had sought an increase of over $9.98 million dollars but agreed to an increase of just $1.8 million as part of the settlement. 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).
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.
“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.
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.
The new rates will go into effect beginning with the June billing cycle.
