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MBLP projects 3.7 percent reduction

Tom Carpenter, executive director, Marquette Board of Light and Power

MARQUETTE — The Marquette Board of Light and Power Board of Directors discussed a cost of service study at its Tuesday meeting to determine MBLP’s future revenue needs and electric rates.

The cost of service study projects that MBLP will be able to lower its rates by an overall 3.7% starting later this year.

No board decision has been made yet, as the cost of service study is still being finalized and it will need to be presented to the board for approval.

Officials are estimating the changes will come into play around Oct. 1, as the board needs time to review and approve the study recommendations, MBLP Executive Director Tom Carpenter said.

“Our next step is to have the consultant develop the cost of service for each individual rate class to support an overall reduction of 3.7% from our current rates,” Carpenter said. “Amongst the different rate classes, there will be some variation above and below the overall 3.7% reduction that will be determined by the cost to serve each individual customer class.”

Each year, MBLP reviews operations and costs to validate that projections were accurate and the company is “trending properly,” Carpenter said.

The cost of service studies are conducted every three to five years or more frequently if necessary, he said.

Utility Financial Solutions was hired to conduct the current cost of service study for the utility. This involves compiling information and calculating what electric rates will be required in order to support overall expenditures and operations, Carpenter explained.

“The study takes into account our current and future operations and capital plans to project what our costs will be over a 10-year time horizon,” Carpenter said. “We are then able to take those cost projections and use them to develop customer rates that can fund the operations of the utility.”

In 2018, MBLP refunded its customers $1.3 million, refunding around $100,000 a month to its customers.

That refund was largely credited to the retirement of the Shiras Steam Plant and the opening of MBLP’s Marquette Energy Center in 2017.

That change in operation is still impacting the rates offered by the municipal electric company, Carpenter noted.

“A key factor in our ability to provide a rate reduction to our customers was the change to operations at the Marquette Energy Center. We have been able to take advantage of the flexible and efficient operating characteristics of the new plant in a way that has reduced our costs. Being a not-for-profit municipally owned utility we are passing back those cost savings to our customers,” he added.

Jackie Jahfetson can be reached at 906-228-2500, ext. 248. Her email address is jjahfetson@miningjournal.net.

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