MARQUETTE - Cliffs Natural Resources officials are frustrated with an electricity rate increase authorized this week by the Michigan Public Service Commission for the Wisconsin Electric Power Co.
"It's very disappointing that we see these rates continue to climb," said Dale Hemmila, director of public affairs North America, for Cliffs Natural Resources. "I think there are about 28,000 rate payers in Michigan affected by the We Energies rate case, but obviously, we're the largest one."
The Public Service Commission's Department of Licensing and Regulatory Affairs said the $9.2 million annual increase is 47 percent below the $17.5 million rate increase Wisconsin Electric requested last July. The commission has the authority and jurisdiction to regulate Wisconsin Electric's retail electric rates in Michigan.
We Energies’ Presque Isle Power Plant in Marquette. (Journal photo by Matt Keiser)
Wisconsin Electric - which does business as We Energies - services 10 of the U.P.'s 15 counties including Marquette, Alger, Baraga, Dickinson, Delta, Gogebic, Houghton, Iron, Ontonagon and Menominee. The company has about 1,300 residential customers in Marquette County.
Hemmila said that as a result of the rate increase, electricity costs at the Tilden and Empire mines will increase by 7.1 percent or $8.1 million annually. Given the rate spike, the company's electricity costs are projected to reach about $130 million this year.
Hemmila said this is the third Wisconsin Electric rate increase authorized in four years, resulting in a 39 percent spike in the mines' electric power costs since 2008.
"It's very frustrating for the mines to have to deal with this on an almost annual basis," Hemmila said.
Hemmila that as with any other business, Cliffs will have to consider the increased costs as the company plans for the future, which could affect jobs. He characterized the $130 million electric cost for the mines as "significant."
Last summer, when Wisconsin Electric made its rate hike request, Hemmila said costs would be the key factor considered by officials looking at extending the life of the Empire Mine.
Wisconsin Electric said it was requesting the additional annual revenue for several reasons including to recover costs associated with additional capital investments to strengthen reliability and to comply with environmental and other requirements; recognition in base rates of the investment in, and operating costs of, hydroelectric and other facilities, and changes in projected sales levels.
John Pepin can be reached at 906-228-2500, ext. 206.