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Just too much.
That’s our position on the Upper Peninsula Power Co. asking its customers for a $17.3 million rate increase, when people and families have already been pushed to the limit by skyrocketing grocery bills and gasoline costs that are closing in on $5 per gallon
Added up, that’s why the Michigan Public Service Commission, the state regulatory agency that has the final say on electrical raters, should reject UPPCO’s rate request as submitted, a proposed hike that would produce an average 15.6% increase for residential customers. Michigan Attorney General Dana Nessel and the Citizens Utility Board of Michigan have challenged that request, recommending that regulators approve no more than $9.9 million -- about 42% less than UPPCO is seeking.
The issue, we believe, goes well beyond the size of the proposed hike. UPPCO also wants to raise its authorized return on equity -- essentially the return it earns on capital investments -- from 9.86% to 10.55%. Nessel's testimony recommends 9.47% instead. According to the Attorney General's office, UPPCO's proposed return would be the highest authorized among Michigan utilities and potentially among the highest in the nation.
Nessel and the Citizens Utility Board are also challenging UPPCO's proposed storm-restoration expense tracker. The mechanism could allow the utility to recover certain storm costs through additional rate adjustments between regular rate cases, reducing the opportunity for the public to review those increases through the normal regulatory process.
Finally, UPPCO also seeks a $15 monthly residential fixed charge, while Nessel's testimony recommends $10.87.
None of this means UPPCO should be denied legitimate costs required to maintain a reliable electric system. It shouldn’t. But the utility should have to demonstrate that every dollar it seeks from customers is necessary and reasonable.
Electricity is an essential service, particularly in our neck of the woods, where winter heating costs can put enormous pressure on household budgets. Customers cannot simply shop around for another electric provider when rates go up.
The MPSC therefore has a responsibility to look beyond UPPCO's bottom line and consider the people who ultimately pay the bill. A 15.6% average residential increase is too large to simply rubber-stamp.
UPPCO customers deserve reliable electricity. But they also deserve a fair rate.