U.P. lawmakers creating resolution to redo utility costs

Courtesy:  Senator Tom Casperson’s Office

LANSING — State lawmakers in Michigan’s Upper Peninsula are banding together to fight a proposal that would put local utility customers on the hook for almost all of an estimated $100 million additional annual cost to keep the Presque Isle Power Plant in Marquette operating.

State Reps. Ed McBroom, R-Vulcan, and John Kivela, D-Marquette, and Sen. Tom Casperson, R-Escanaba, have partnered to introduce resolutions in the Michigan House and the Michigan Senate. With support from Rep. Scott Dianda, D-Calumet, the legislators have formally demanded the Federal Energy Regulatory Commission (FERC) reconsider its acceptance of the Midcontinent Independent System Operator’s (MISO) proposed system support resource cost allocation tariff because it puts an unfair and excessive burden solely on the ratepayers in Michigan’s Upper Peninsula, moving the historic cost division from a 6 percent share to 99.5 percent.

“The operator’s agreement for support resources allocation previously spread the expenses equitably, so all customers paid their fair share for a regional grid of reliable electric service,” McBroom said. “But now that federal regulations and other agreement changes have upped the cost of doing business at the Presque Isle Power Plant, the only significant source of electric generation left in the Upper Peninsula, this plan would have our residents foot almost the entire amount when their utility bills go through the ceiling.”

The previous operating agreement between American Transmission Company-which owns electric transmission facilities in Michigan’s Upper Peninsula as well as parts of Wisconsin, Illinois, and Minnesota-and MISO, the regional operator of the transmission grid, included a tariff that was assessed to all electric utilities within the ATC’s footprint on a pro-rata basis. Along with changing the tariff assessment method, the new proposal also creates a local balancing authority that pushes more costs onto Upper Peninsula ratepayers.

“This new setup not only ignores the historical division of these costs and has nothing to do with reliability, but it is unreasonable, unfair and unjust,” Casperson said. “It will undoubtedly devastate seniors, families, businesses, and critical institutions, like hospitals, across the Upper Peninsula.”

The debate began in early 2014, when Wisconsin Electric Power Company announced intentions to close the Presque Isle Power Plant due to increased federal Environmental Protection Agency regulations, but MISO determined the company had to continue operating the facility with system support resource payments (SSR payments). The Wisconsin Public Service Commission objected to how the payments were allocated, and MISO submitted the updated proposal placing 99.5 percent of the cost of keeping the PIPP operational on Upper Peninsula customers, making electric utility customers in the U.P. alone responsible for at least $99.5 million that has been ordered for ongoing plant operations.

“It is essential for future growth and prosperity within the Upper Peninsula that we have reliable and affordable energy for the residents and businesses of the region,” Kivela said. “Maintaining energy generation within the UP is the long-term goal of the UP legislative delegation, as it is a key part of guaranteeing the reliability of the local grid. However, the short-term consequences that would be created by the recent MISO proposal regarding SSR payments will harm Michigan families and local businesses immediately and going into the future. FERC must not accept the most recent cost shift proposal submitted by MISO.”

Both Wisconsin’s and Michigan’s public service commissions have said FERC’s $100 million assessment is an unreasonable recovery for the utility, but the lawmakers’ resolutions request that at a minimum the federal agency adjust the support resources cost so they are divided in a more equitable way that takes into account the historical context and original cost allocation agreement.

Senate Resolution 187 was approved on Oct. 22; the House versions will be considered soon.

Once approved, copies of the resolutions will be sent to the Federal Energy Regulatory Commission chairman, the governors of Michigan and Wisconsin, and members of the Michigan and Wisconsin Congressional delegations.