UPPCO’s power cost estimate refund to slightly increase bills

Graphic from Michigan.gov This map marks service areas for different electrical utilities in the Upper Peninsula. UMERC is marked in green and UPPCO in blue.

Several electric utility companies have filed their applications with the Michigan Public Service Commission (MPSC) for their 2019 Power Supply Cost Recovery (PSCR) plans. Customers of Upper Peninsula Power Company (UPPCO), Upper Michigan Energy Resources Corporation (UMERC), and Wisconsin Electric Power Company (WEPCO) will see adjustments on their bill in 2019.

“We end up having to do this once a year, every year,” said Brett French, UPPCO vice president of communications.

If the application is approved, UPPCO customers will be paying $0.01286 more per kilowatt-hour in 2019.

Since 1939, the MPSC has regulated and approved rate adjustments for investor-owned utilities like UPPCO and UMERC. Municipal and co-op utilities are regulated locally. The MPSC is made up of three people appointed by the governor, and currently consists of Sally Talberg, Norman Saari, and Rachel Eubanks. Hearings are open to the public and viewable online.

Before each year starts, the MPSC reviews and approves utility rate adjustments based on fuel and energy costs projected by each utility. At the end of the year, companies return to the MPSC and seek approval for their PSCR, which is an adjustment to each consumer’s bill based on actual numbers rather than projections.

“When you go to the gas station, you know what you’re paying for gas because you see it on the pump,” French said.

Since rates for power companies are approved far in advance, utilities estimate what they will be paying for the fuel to generate electricity, or the electricity itself if their own production falls short.

Utilities do not make a profit or take a loss on their fuel purchases, according to Nick Assendelft from MPSC Media Relations.

“The reconciliation process at the MPSC ensures that customers pay the actual fuel costs, not too much or too little,” Assendelft said in an email.

UPPCO’s PSCR for November and December of 2018 is a $0.03 credit per kWh, according to French. For 2019, UPPCO is applying for a PSCR factor of $0.01714 per kWh, still as a credit to its customers. According to French, the credit for 2019 is because an unusually wet summer kept UPPCO’s hydroelectric generation high during 2018. This meant UPPCO bought less energy from other sources, reducing the cost of supplying the area with power. This cost reduction is then forwarded to the consumer through a PSCR.

“At the end of the day, people only pay for the cost of the energy they’re consuming,” French said.

UPPCO serves the northern half of Baraga County, north and central Houghton County, most of mainland Keweenaw County and the northwest area of Ontonagon County.

UMERC, which serves southern portions of Baraga and Houghton counties, and the southeastern portion of Ontonagon County is applying for two different PSCRs.

It is requesting a factor of $0.00313 per kWh for the WEPCO rate zone and $0.00219 for the WPSC (Wisconsin Public Service Corporation) rate zone. WE Energies is the parent company for WEPCO and UMERC.