Editor’s note: Today is the second day of a five-day series of articles on critical electricity cost issues facing the Upper Peninsula.

MARQUETTE – The Michigan Public Service Commission has been leading the Michigan challenge to several proposed Wisconsin-related actions before the Federal Energy Regulatory Commission that are slated to dramatically hike bills of Upper Peninsula electricity customers.

Several parties have numerous claims, counter-claims and protests waiting for FERC rulings, which leave several key issues hanging in the balance that will affect U.P. consumer electric bills.

The Michigan and Wisconsin public service commissions have the authority to argue before the FERC that proposed changes would not be in the best interest of their ratepayers.

“We’re feverishly making comments in a lot of these different dockets,” said Michigan Public Service Commission Chairman John Quackenbush. “We’re trying to make the right arguments in the right places to have a better outcome here.”

Among the docket issues, the Michigan commission has asked for a rehearing of a recent FERC decision that found in favor of the Wisconsin Public Service Commission. The Wisconsin complaint argued allocation of costs to keep the Presque Isle Power Plant operating should be changed from 92 percent for Wisconsin ratepayers and 8 percent for Michigan to better reflect which ratepayers benefit from operation of the plant.

The Michigan commission has a complaint against Presque Isle plant owner We Energies and the North American Electric Reliability Council arguing We Energies used a federal loophole to create a new local balancing authority to impose cost allocation without due process.

The Michigan commission wants the NERC approved creation of the LBA – which would segregate Presque Isle operation costs almost exclusively to U.P. ratepayers – overruled or clarified to instruct that the split has no cost allocation applications.

The Michigan commission is also challenging a We Energies request to retire, rather than suspend operations of, the remaining five operating units at the Presque Isle plant. An associated proposed agreement increases the amount of subsidies paid to the utility to operate the plant.

“The two main things going on is the Wisconsin parties are wanting to take Michigan’s share of the cost allocation share from 8 percent to 14 percent to 99 percent. Then, on top of that is the whole request by WepCo (We Energies) to change the suspension of Presque Isle to a retirement of Presque Isle,” Quackenbush said. “Because that, in and of itself, takes the $52 million System Support Resource (subsidy) number and it increases it to $97 million. So when we’re talking about 99 percent, the 99 percent of $52 million, if you take that up to 99 percent of $97 million, that’s even worse.”

The new We Energies agreement is slated to take effect today, pending a FERC ruling.

Quackenbush said FERC could issue an order approving the request or if it wants to delay a decision, could schedule a hearing on the matter.

“We’ve asked them to set it for hearing because we say there are certain issues at stake,” Quackenbush said. “Because if you look at what drives the $52 million to $97 (million), the biggest chunk of it is costs that the company already recovers through their rates that we set here in Michigan.”

Quackenbush said We Energies is permitted to recover depreciation and a return on the net book value of the plant, which are already recovered in Wisconsin and Michigan rates set by state regulators.

“It’s like $30 million is related to depreciation and the return on the plant,” Quackenbush said. “What WepCo is asking is to collect those costs through the SSR payment and that would be double-counting, it’s like double-dipping. At the least, we think the states have the rights to do rate-making. It’s already recovered the way we think it should be. So we don’t think the feds should step in and take away our authority there.”

Quackenbush said if FERC does rule that way that will probably precipitate filings at the state level to remove from rates some of the charges to prevent double-dipping.

Complaints from others at the FERC involve SSR subsidy cost allocations for operations at the Escanaba and White Pine power plants, with much smaller dollar amounts involved.

Cliffs Natural Resources has complaints against the Midcontinent Independent System Operator and We Energies arguing the MISO tariff involved with cost allocations should be altered. The mining company is aligned with the Michigan commission requesting a rehearing of the Wisconsin Public Service Commission decision.

“For any regulatory decision, there’s kind of a prescribed legal regulatory path to appeal and we’re pursuing all of those,” said Dale Hemmila, Cliffs Natural Resources’ director of public affairs for North America.

Cloverland Electric Cooperative in the eastern U.P. is protesting MISO’s allocating costs of Presque Isle operation to itself and other entities that do not benefit from operation of the plant.

Meanwhile, We Energies asked the FERC to hold the MISO cost allocation plan in abeyance until it can be determined whether MISO’s use of LBA’s to allocate costs of the Presque Isle SSR units is appropriate.