ISHPEMING - The Upper Peninsula Power Company applied Friday to the Michigan Public Service Commission for permission to raise retail electric base rates for 2014 by 8.1 percent.
While the overall effect on customers will vary by rate classification and geographical area, if approved, the average residential customer in the UPPCO system using 500 kilowatt-hours of electricity per month would see an increase of approximately $10.15 per month.
The MPSC oversees the rates UPPCO charges and must approve any rate increases. The actual increases may change.
Company officials said the major reasons for UPPCO's request were directly related to the increased expenses including:
- Required safety improvements at the Victoria and Prickett hydroelectric generation plants
- Rebuilding a generator and other improvements at Hoist hydroelectric generation plant
- Improvements to the electric system for increased reliability
- Increased tree trimming to reduce weather related outages
- General inflation
"We know rate increases are difficult for our customers," said Jodi Pineau, UPPCO's customer operations supervisor. "Unfortunately, they're necessary for us to ensure the safe and reliable energy that customers depend upon. We have made efforts to reduce costs such as health care benefit changes that have resulted in significant savings."
UPPCO officials said the company's service territory is large and, for the most part, sparsely populated.
"As costs to maintain our large distribution system rise, we have fewer customers per miles of electric line to share the costs than a more compact urban utility," Pineau said. "Still it's never easy raising rates."
UPPCO operates primarily in rural areas covering 10 of the 15 U.P. counties. It serves approximately 52,000 electric customers spread over 118 communities.
UPPCO owns about 3,300 miles of electric distribution lines and 58 distribution substations.