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MARQUETTE -- State Attorney General Dana Nessel is asking state regulators to sharply reduce a proposed Upper Peninsula Power Co. electric rate increase, arguing the utility should receive no more than $9.9 million of the $17.3 million it wants.
Nessel filed testimony with the Michigan Public Service Commission earlier this week in the rate case, jointly with the Citizens Utility Board of Michigan. The testimony recommends cutting UPPCO's requested increase by about 42%.
"Electric rates for UPPCO's residential customers are already significantly higher than the national average and it's essential that the MPSC consider this when examining the reasonableness of further rate hikes," Nessel said.
But Dan Freeborn, the UPPCO manager of communications and external affairs disagreed. When contacted late Friday by The Mining Journal, Freeborn said the proposed UPPCO rate hike is entirely appropriate.
“It reflects the cost of providing the service,” Freeborn said. “We appreciate her comments …”
The $17.3 million rate increase UPPCO is seeking would, if ultimately approved, amount to an average 15.6% increase for residential customers.
As a part of the same case, the utility wants to raise its return on equity -- essentially the profit margin it earns on capital investments -- from 9.86% to 10.55%. Nessel's testimony argues the commission should instead authorize a 9.47% return on equity.
If approved, UPPCO's proposed 10.55% return would be the highest authorized return on equity among Michigan utilities and, according to the Attorney General's office, likely among the highest in the nation.
According to an AG press release, Nessel’s testimony also challenges several other portions of UPPCO's request, including UPPCO's proposed storm restoration expense tracker, which would allow the utility to recover certain storm-related costs through additional rate adjustments between regular rate cases.
"The MPSC should also reject mechanisms, like the one UPPCO proposes in this case for storm costs, because they only allow the utility to raise rates even higher outside of the usual, public rate review process," Nessel said.
The testimony also calls for reducing UPPCO's proposed fixed monthly residential charge from $15 to $10.87.