U.P. rate increases on hold as FERC seeks more information

This story was updated to include comments from MISO.

The Federal Energy Regulatory Commission has delayed a proposed cost-allocation structure that would leave Upper Peninsula residents paying tens of millions of dollars annually to keep an aging coal plant open in Marquette.

In its ruling Friday, the FERC directed the Midcontinent Independent System Operator, or MISO, to provide more information about its payment methods to keep the We Energies’ Presque Isle Power Plant open under a System Support Resource agreement. The cost increases were scheduled to take effect today.

Judy Palnau, spokeswoman for the Michigan Public Service Commission, told the Associated Press today that Michigan ratepayers “will get three additional months of protection from the huge cost increases.”

The federal regulatory body called MISO’s proposed rate schedules “deficient.” It asks MISO to address six questions related to determining costs for keeping Presque Isle open, including to what extent MISO considered effects on entities that don’t directly benefit from Presque Isle’s operation.

Specifically, the FERC asks MISO why Cloverland Electric Cooperative, which is “located entirely outside of the load-shed area identified by MISO,” would see a 20 percent increase under the proposed allocation, costing the co-op nearly $2 million a month.

“It’s good news,” said Cloverland CEO Dan Dasho. “We’re very excited to see a delay on the part of this cost they’re trying to hit the U.P. with. It puts everything on hold while they get more information from MISO.”

MISO has 30 days to comply with the ruling. Dasho and Palnau said the delay would likely be at least three months.

“We will respond to FERC’s request for more information, and continue to work with stakeholders across the region to study proposed solutions,” MISO spokesman Andy Schonert said in an email. “MISO will continue with its efforts to help address this difficult situation as quickly and efficiently as possible.”

Although a media report on Sunday said that costs were shifting onto U.P. ratepayers starting today, it’s unclear when and how SSR payments will be reconfigured.

MISO submitted the original SSR agreement in January. In April, the Public Service Commission of Wisconsin filed a complaint alleging that the cost structure was “unjust, unreasonable, and unduly discriminatory,” according to FERC filings.

The FERC recently ruled that costs to run Presque Isle will increase from $52 million to $117 million to account for new pollution controls.

In that time, the story has attracted national media attention as communities deal with aging coal plants and new air pollution regulations. Top state officials and members of Michigan’s Congressional delegation have called on FERC to reconsider the cost allocation proposal.

3 thoughts on “U.P. rate increases on hold as FERC seeks more information

  1. While $117 million per year, or $9.7 million per month, is a huge cost, it pales in comparison to the 2 major “reliability” solutions being put forth to solve the U.P.’s generation issues. (1) “out-of-state” generation/transmission model–WE Energies and American Transmission Company would like to build out $750 million in additional high tension lines from Wisconsin into the U.P., to bring more coal and nuclear power to U.P. residents. Of course, the costs would be borne by U.P. residents. How high do our current 25 cent per kWh prices go with that invoice?
    (2) “out-of-country natural gas PIPP retrofit model”–the Governor’s Office and others support EPA upgrades, changeover to natural gas, and transmission build out from Canada for PIPP, at an estimated cost of between $1 and $2 billion. How high do our current 25 cent per kWh prices go with that invoice?
    The Keweenaw Renewable Energy Coalition has sent a PLAN to the Governor & our Senators to bring energy independence to the first 2 U.P. Counties (Houghton & Keweenaw Counties). KREC estimates that the entire U.P. can be served by baseload (biomass, hydro) and peaking power from wind & solar for $750 million or less–locking in prices for 20 years, moving off polluting fossil fuels, and bringing jobs & dollars to our residents & businesses–not other states or countries.