The Upper Peninsula Power Company announced that under a settlement agreement with the Michigan Public Service Commission (MPSC), it will raise its rates for some customers on July 1, 2023.

Under the approved settlement, the monthly bill for a residential customer that consumes 500 kilowatt hours of energy will increase from $121.08 to $133.38; an increase of $12.30 or 10.1%, UPPCO stated in a Mar. 24 release.

In a statement released the same day, the MPSC said that UPPCO, which serves approximately 53,000 customers in the western and central UP, had initially sought an increase of $25.3 million, citing continued infrastructure investments and associated operating expenditures needed to improve reliability and resiliency. The March 24 order reduces that amount by more than 57%. UPPCO also agrees not to seek to have rates increased again before January 1, 2025 and that the utility company will work with MPSC Staff to develop and file a distribution investment and maintenance plan by January 31, 2025.

UPPCO stated that the approved settlement establishes a residential income assistance credit that will be applied toward the monthly bills of low-income customers, includes $200,000 in corporate donations to non-profit organizations that serve low-income citizens, increases the cap for customer-owned distributed generation from 3% to 4.5%, and adjusts the base rates that are charged to all customers to reflect the actual cost of providing electric utility service.

“UPPCO’s base rates haven’t increased since the company’s last rate review case was approved by the MPSC nearly 4 years ago,” Brett French, UPPCO’s vice president of business development and communications, is quoted in the release as saying. “During that time, UPPCO has successfully contained costs while making significant investments that improve upon customer service and increase the reliability and resiliency of its distribution system.”

“When compared against the rate of inflation over the past four years, this increase is actually lower than the compounded rate of inflation–a testament to the company’s ongoing efforts to contain costs and deliver exceptional value to the customers we serve,” said French.The new rates will go into effect beginning July 1, 2023.

According to the MPSC, other highlights of the settlement agreement include:

• Effective July 1, 2023, UPPCO is to establish a regulatory asset of $863,118 for the amount recorded by the Company as uncollectible debt from unpaid customer bills during the COVID-19 pandemic. UPPCO agreed to reduce the amount by $200,000, which the utility will donate to organizations assisting low-income customers in UPPCO’s service territory. The remaining balance will be amortized over a two-year period ending by June 30, 2025.

• UPPCO will raise its discretionary distributed generation cap from 3% to 4.5%.

• UPPCO will file a report on all projects over $50,000 completed to convert overhead lines to underground since January 1, 2022, with data on reliability benefits, costs and benefits compared to tree trimming and grid hardening, and other metrics.

• UPPCO will institute a residential income assistance tariff providing a $15 monthly bill credit for low-income households at or below 150% of the federal poverty level.