UPPCO Electric Rates Increase

The Michigan Public Service Commission has authorized the Upper Peninsula Power Company, a subsidiary of Integrys Energy Group, to increase its overall electric base rates. The rates will jump by 4.17 percent beginning January 1, 2012. The final amount of the increase is less than UPPCO’s original request due, in part, to the company’s success in seeking a 2-year waiver from a requirement to read meters monthly.

A typical residential customer (using 500 kilowatt-hours) in UPPCO’s Integrated System will see a monthly increase of $5.70. Typical residential customers in Iron River will see an increase of about $8.36 monthly.

The cost of safety improvements to bring the McClure, Bond Falls, Victoria, and Prickett dams up to current Federal standards, as well as the loss of electric load in the wholesale market account are the primary drivers for the increase.

“We’re near 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, “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. 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 reducing 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 value to customers.”