MARQUETTE — Customers of SEMCO Energy Gas Co., the Upper Michigan Energy Resources Corp. and the Upper Peninsula Power Co. will see reductions in their bills starting in July.

The reductions, according to a Michigan Public Service Commission press release, represent the largest cost-savings customers will see from an MPSC order initiated in February in response to the federal Tax Cut and Jobs Act, which was signed into law in December.

The reason for the order, according to the MPSC, is because current utility rates paid by customers were set in previous rulings using the 35 percent federal income tax rate.

Thus far, the MPSC has approved a total of about $101.2 million in billing reductions for gas and electric customers at eight of the investor-owned utilities across Michigan as a result of the order.

A settlement agreement with UPPCO announced by the MPSC Thursday represents nearly $3.4 million in savings for the company’s 52,000 electric retail customers.

UPPCO residential customers using an average of 500 kilowatt-hours per month can expect a $3.40 decrease on their monthly bills, the release states.

The MPSC approved settlement agreements of nearly $6 million in savings for SEMCO customers, and almost $1.4 million for UMERC customers on May 30.

The SEMCO settlement will result in a $1.74 reduction for residential customers using an average of $10,000 cubic feet per month, while the UMERC agreement would constitute a $1.93 savings for residential customers using an average of 500 kilowatt-hours per month.

The MPSC settlement agreements are the first step in a three-step process for utilities operating in Michigan to calculate tax savings from the TCJA, which reduced the corporate tax rate from 35 percent to 21 percent, and pass them on to customers in a timely manner.

The decreases considered “Credit A,” captures future cost savings based on the new tax law, the MPSC release states. Credit B will look backward at savings due to ratepayers from Jan. 1 through July 1. Calculation C, the third accounting adjustment, will figure the impact of other items such as excess deferred taxes or bonus depreciation not accounted for under credits A and B.

The impact on credit B and Calculation C will be decided later this year, the MPSC release states.

Brett French, UPPCO vice president of business development and communications, said the initial TCJA ruling by the MPSC will increase the savings already being realized by UPPCO customers.

“When added to $11 million in other cost-saving measures that UPPCO implemented at the beginning of the year, our customers are now spending $14 million less for their energy on an annual basis,” French said.

John Liskey — counsel for the Lansing-based nonprofit Citizens Against Rate Excess, a utility watchdog organization — said any amount of savings for customers is a good start.

“We are delighted with the commission’s action,” Liskey said. “UPPCO customers have for too long been paying some of the highest rates in the nation. This reduction, while small in comparison to the average total bill, is a step in the right direction.”

The MPSC issued an additional order to UPPCO on Thursday related to its estimated billing practices. The company must file a detailed report about its estimated billing practices at least 60 days before it seeks another meter reading waiver extension from the MPSC.

Residential billing rules governing Michigan companies require a utility to read meters every month and UPPCO has requested and been granted waivers of the rules, in place since 2007, to read meters every other month.

UPPCO’s use of estimated billing has prompted customer complaints about inaccurate bills and an investigation by Commission staff.

French has said in the past that dispatching meter readers every month would cost $1 million.

Lisa Bowers can be reached at 906-228-2500, ext. 242.