UPPCO Seeks Electric Rate Increase

Ishpeming, MI – Upper Peninsula Power Company (UPPCO), a subsidiary of Integrys Energy Group (NYSE: TEG), yesterday filed a request with the Michigan Public Service Commission to increase its overall electric base rates by 7.7 percent.

If approved as proposed, a typical residential customer (using 500 kilowatt-hours) in UPPCO’s Integrated System would see a monthly increase of $9.06. Typical residential customers in Iron River would see an increase of about $11.90 monthly.

The cost of safety improvements to bring the McClure, Bond Falls, Victoria, and Prickett dams up to current Federal standards, and the loss of electric load in the wholesale market account are the primary drivers for requested increase. Lesser factors include general inflation, monthly meter reading (for which the company will seek a waiver to continue with semi-monthly reading from the Michigan Public Service Commission), and increases in the cost of providing benefits to employees.

“We’re nearing the end of making the required dam safety improvements and we sold two facilities so we could avoid more costs,” said UPPCO Vice President and General Manager Keith Moyle, “so pressure on rates from those kinds of efforts should decrease in coming years. However, the loss of the wholesale electric load is making an impact. Even though there were lower margins in sales to those customers, wholesale load provided revenues to UPPCO that it could use to help offset cost increases to retail customers.”

Moyle said the company is still working to keep its costs down, including reduced the employee count by about 10% over the past few years but pointed out that customer density in the U.P. is very low and costs to maintain, repair and upgrade the thousands of miles of electric lines is spread over far fewer customers than in more populated areas. “We’re still at the staffing level to provide safe and reliable electricity,” he said. “We just eliminated or refined some processes to improve providing value to customers.”

If the MPSC does not consider the rate request by the end of 2011, UPPCO will self-implement rates (subject to refund) on January 1, 2012. UPPCO expects MPSC to makes its decision by June 2012.

More information regarding the rate request will be included with customers’ August bills.