Commission approves rate case settlement agreements for Upper Peninsula Power Co., Michigan Gas Utilities Corp.

News media contact:Matt Helms 517-284-8300

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The Michigan Public Service Commission today approved two settlement agreements involving Michigan electric energy utility Upper Peninsula Power Co. (UPPCO) in the UP and Michigan Gas Utilities Corp. (MGU) in the Lower Peninsula.

The Commission approved a settlement agreement permitting UPPCO to raise rates by $9 million, with all participants in the case agreeing to the settlement's terms. The amount approved represents a reduction of almost 47% from the utility's initial request for $16.9 million (Case No. U-21555).

A typical residential customer using 500 kWh a month will see an increase of $7.52, or 5.7%, on their monthly bill, effective Jan. 1, 2025.

The settlement represents an overall capital structure of 50% common equity and an authorized return on equity of 9.86%.

Among key terms of the agreement, UPPCo will adopt the state reliability mechanism (SRM) capacity charge calculation method supported in testimony and exhibits. The SRM capacity charge will be subject to a reasonableness and prudency review in the company's next general rate case.

In addition, the settlement agreement also requires UPPCO to include Federal Energy Regulatory Commission tests utilizing the most recent 12 months of system peaks available at the time of filing and the projected system peaks for the test year examining whether a 12 coincident peak (CP) or 4 CP demand component of the production capacity cost allocator would more appropriately align the utility's costs with their causation in its next rate case filing.

UPPCO also will donate $200,000 to organizations benefitting low-income customers within its service territory. The utility will confer with MPSC Staff and Attorney General Dana Nessel's office to identify appropriate organizations to receive this donation and the parameters of the donation.

Intervenors in the UPPCO case were the Attorney General, Citizens Utility Board of Michigan, Calumet Electronics Corp., Billerud Americas Corp. and the Association of Businesses Advocating Tariff Equity. MPSC Staff also participated.

Separately, the Commission approved a settlement agreement permitting MGU to increase rates by $7 million, a reduction of more than 60% from the $17,575,013 the utility initially sought (Case No. U-21540).

A typical residential customer using 100 ccf of gas a month will see an increase of $0.59, or 0.7%, on their monthly bill as of January 1, 2025. Starting January 1, 2026, such customers will see an additional increase of $0.23, or 0.3%, from the rates effective January 1, 2025, as a result of the Main Replacement Program surcharge. Starting January 1, 2027, such customers will see an additional increase of $0.33, or 0.4%, from the rates effective January 1, 2026, also as a result of the Main Replacement Program surcharge.

The increase represents an overall capital structure of 50% common equity and an authorized return on common equity of 9.86%. MGU's total sales forecast is 34,900 million cubic feet, excluding company use and losses.

Among the terms of the settlement agreement, MGU is authorized to create a regulatory deferral asset for operation and maintenance costs associated with compliance with new federal leak detection and repair rules expected to go into effect in 2025, to be recoverable in the company's next general rate case, subject to a review for reasonableness and prudency. The settlement resolves all issues in the case.

The Michigan Attorney General's office intervened in the case, along with the Citizens Utility Board of Michigan and the Association of Businesses Advocating Tariff Equity. MPSC Staff also participated.

For information about the MPSC, visit www.michigan.gov/mpsc, sign up for its monthly newsletter or other listservs. Follow the MPSC on Facebook, X/Twitter or LinkedIn.

To look up cases from today's meeting, access the MPSC's E-Dockets filing system.

Watch recordings of the MPSC's meetings on the MPSC's YouTube channel.

DISCLAIMER: This document was prepared to aid the public's understanding of certain matters before the Commission and is not intended to modify, supplement, or be a substitute for the Commission's orders. The Commission's orders are the official action of the Commission.

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