Energy outlook brighter for UP ratepayers
Flashpoint: Guest Column
They say you need to be a hearty soul to live in the Upper Peninsula, but that doesn’t mean you should have to live with energy that isn’t affordable, reliable and environmentally protective.
At the start of the Snyder administration, the U.P. had little control of its energy future. This week, we are seeing the positive effect of years of work, with some key cornerstones laid to provide the U.P. a firm foundation to manage its energy future.
Parts of the U.P. have the highest utility rates in the country. That problem needs to be addressed, and we need Yoopers – not people in Wisconsin or Washington, D.C. – to have control to make that happen.
This week’s developments have definitely helped.
It started with a decision Michigan has been waiting three years for – a ruling by the Federal Energy Regulatory Commission (FERC) confirming what we had argued for years: the federal system required ratepayers to pay nearly double what was reasonable to operate the Presque Isle Power Plant (PIPP) in Marquette.
That arrangement was the result of a utility with nearly 90 percent of its customer base outside of Michigan using a tool of the federal regulatory system to escape state oversight. The utility cut a deal in the federal system – where costs to run the PIPP could be negotiated in secret and collected from ratepayers years before anyone put them to the smell test.
That was unacceptable, and Michigan dug in and fought it. We spent millions in legal fees to protect the U.P. – and it paid off. Not only will approximately $23 million come back to PIPP ratepayers, the federal government will have further investigations into potential fraud and market manipulation by the utility.
That battle is not over – we are still fighting today to make sure Michiganders only pay our fair share of any costs, and to end secret deals that have unfairly increased Yoopers’ energy bills and taken decision-making away from Michigan residents.
But we aren’t just fighting at the federal level – we are working hard at the state level to make sure this never happens again.
First, provisions in the new energy laws prohibit utilities from trying to shut down power plants that are vital for service without notice. So even if the federal government won’t prevent future secret deals, our utilities will have to reveal their plans publicly.
Second, on Wednesday, the Michigan Public Service Commission approved a plan by Upper Michigan Energy Resources Corp. – a new utility with 100 percent of its customers in Michigan – to build two power generation plants at a total cost of $277.2 million.
The two facilities will improve electric reliability for the U.P. and ensure Yoopers cannot be saddled again with federal costs for running PIPP, or hundreds of millions of dollars for unnecessary transmission lines.
The plants should be operational in 2019, producing a total of 183 megawatts of electricity to serve Michigan customers, including the Tilden Mining Co. – which has agreed to pay a big chunk of the costs and to shut down in high-demand times to protect other customers’ electric bills from spiking.
We are also moving forward in understanding possible steps for the future.
On Friday, we received the preliminary results of the Michigan Transmission Expansion Study which identified good spots for new generation that would improve reliability without additional major infrastructure investments.
The study also found that linking Michigan’s transmission grid to Ontario’s had costs that greatly outweighed the benefits – as would strengthening the link between the Upper and Lower peninsulas. That possibility has been discussed for a long time, and that is why the Governor made sure that study was a priority.
Meanwhile U.P. ratepayers have a tool they can use today to lower their bills. In Marquette last year, Gov. Snyder reminded everyone that the cheapest energy is the energy we never use.
That is especially true in the U.P., where most utilities have contracts to buy power from Wisconsin, so every dollar saved is an immediate and direct savings to Yoopers. To take advantage of putting Yoopers to work while lowering bills, we need everyone’s help in reducing energy waste.
By taking action at all levels, we have laid a firm foundation for the U.P.’s energy future.
These recent developments show the issues facing the U.P. are not insurmountable – and moreover, Michiganders can win when we work together. The Michigan Agency for Energy is excited to partner with Yoopers to build on this momentum so the Upper Peninsula is an even better place to live, work and play.
Valerie Brader is executive director for the Michigan Agency for Energy.