UPPCO should do more to justify rate increase request

The Upper Peninsula Power Co. applied Friday with a state oversight board to raise its electric base rates by 8.1 percent. On the surface, at least, this is a move that concerns us.

Of the numerous electric providers servicing various parts of the central Upper Peninsula, UPPCO already has the highest rates, and we would like to see the company take a moment to more thoroughly justify such an increase to consumers before moving forward.

According to the company, the increase, which would take effect in 2014, would rebuild a generator and allow for increased tree trimming. In addition, the hikes will facilitate “safety improvements” and “other improvements” and are related to “general inflation.”

We would like a bit more detail, especially since UPPCO’s rates have been climbing at a fairly steady pace since at least 2006.

In a June 2 Mining Journal article on the topic of electric rates, Staff Writer Kyle Whitney compared local electric rates, and a front-page graphic detailed the ultimate per-kilowatt-hour cost to consumers using 500 kwh per month. Of the four main utilities servicing Marquette County – UPPCO, We Energies, the Alger-Delta Electric Cooperative and the Marquette Board of Light and Power – UPPCO’s rates were the highest.

As an example, a Marquette city resident and customer of the BLP – which serves the city of Marquette and parts of nine surrounding townships – using 500 kilowatt hours of electricity in a month will see a bill of $42.70. An UPPCO customer using that same amount of electricity would pay $104.35, according to data from the Michigan Public Service Commission.

The per-kwh charge to that theoretical consumer has climbed from less than 14 cents in 2006 to nearly 21 cents. And UPPCO’s own estimates indicate that the total monthly bill could increase by more than $10 under Friday’s proposal.

We understand that the cost of doing business is always increasing, and are receptive to that reality. But if it truly is necessary for UPPCO – a utility with some of the highest rates around – to hike rates by more than 8 percent, the company should take a page out of a neighbor’s playbook.

Wisconsin-based We Energies’ rates have also risen recently, but the company did a great job of explaining to consumers that it was increasing generation capacity by 50 percent and that the front-end costs of the reliability project would need to be borne by ratepayers.

We would suggest that UPPCO, if it hopes to maintain good faith in the region, engage in a similar dialogue with the public.