UPPCO CEO: Rate decreases forecast for customers this year
HANCOCK — Upper Peninsula Power Co. customers should see cost reductions across the board in 2018, CEO James Larsen said in a presentation to the Keweenaw Economic Development Alliance Wednesday.
Residential bills have the smallest decrease, with January 2018 rates projected to be 3 percent lower than in January 2017. Small commercial is projected to decline by 9 percent, medium 10 percent and large 17 percent.
“Although we would like that number to be bigger for residential, and there are some things we’re working on for that, at least it’s not going up,” Larsen said. “We’re actually working and trying to get it going in the right direction.”
Larsen said UPPCO has been working on getting more financial assistance to customers struggling to pay their bills.
“If we can get them more funding and they can pay their bills, it actually reduces the bills for everybody, because it’s less bad debt,” he said.
After 19 years of being owned by the Wisconsin Public Service Resources Corporation, UPPCO returned to being a stand-alone utility in Feburary.
UPPCO has identified $5.5 million in power supply savings this year in an attempt to bring costs down. UPPCO has also found $2 million in savings in operating and maintenance costs, he said.
“I’m finding that very easy, because we’re a new company, a lot of things were done quickly just to get it up and get going, and now we’re at a point where we can look for efficiencies and do things smarter, faster, cheaper,” he said.
UPPCO will also save about $2 million after the Federal Energy Regulatory Commission ruling regarding the Presque Isle plant. The commission found that Wisconsin Electric Power Co. overcharged U.P. ratepayers by $23 million while operating the plant. The Presque Isle savings have yet to be factored into the cost projections for customers, Larsen said.
Some of the drivers for the high prices at UPPCO are the loss of major customers such as Smurfit-Stone, as well as being in a remote area, Larsen said. For factors specific to UPPCO, Larsen mention the company’s investment in hydrogeneration.
“Our rate base is a little over $200 million, so to spend $55 million on your company, that’s a significant chunk of your company,” he said.
Another part is UPPCO’s pension, which is 100 percent funded. Though it has been closed to new employees for eight or nine years, it’s still covering 631 retirees. Due to a number of changes of ownership, that number includes former employees of the Presque Isle coal plant.
“Even though we’re not affiliated with Presque Isle anymore, their retirees are on our plan,” he said.