Michigan senators challenge Upper Peninsula rate increase

Dive Brief:

Michigan Senators Carl Levin (D) and Debbie Stabenow (D) have asked the Federal Energy Regulatory Commission (FERC) to postpone a $97 million annual rate increase for customers in Michigan's upper peninsula. The increase is meant to finance the operation of an aging coal power plant near Marquette, Michigan.
MISO had scheduled the Presque Isle plant—owned by Wisconsin-based We Energies—for closure "as soon as practically possible," but the North American Electrical Reliability Corporation ordered that it stay open to ensure reliable electricity for northern Michigan.
The Michigan Public Service Commission is also challenging a FERC ruling that would make Upper Peninsula residents and businesses pay for the plant's operations, according to the Detroit Free Press. They want the cost of operation to be spread over all of We Energies' customers, which Wisconsin opposes.

Dive Insight:

As We Energies pushes the Presque Isle power plant closer to retirement, residents of Michigan's Upper Peninsula are wondering where they will get their electricity, and at what price.

Midwest Energy News reports that the future of Presque Isle was put in jeopardy when Cliffs Natural Resources, the operator of two iron ore mines, decided it was fed up with We Energies price increases and used Michigan's energy choice law to switch to a cheaper electricity provider. Cliffs consumed 85 percent of the plant's generation and was We Energies' largest single customer.

Upper Peninsula residents also rely on power from Presque Isle, however, raising the question of who would pay to keep the plant open in a region with precious few generation alternatives. FERC issued an order in July saying that U.P. residents and businesses should finance the plant, leading to We Energies' proposed $97 million rate increase it says is essential to keep the plant operational.

The two Michigan senators say that We's ask is too much. "Federal law requires that rate increases be reasonable and justifiable, and this proposed increase is neither," Levin said in a statement, according to the Free Press. They and the Michigan Public Service Commission want FERC to revisit its order stipulating that U.P. residents finance the plant.

Michigan policymakers are currently scrambling to develop plans for new, reliable generation before Presque Isle shuts down for good. Options range from developing natural gas and biomass to renewables and expanding transmission to Wisconsin plants, which are geographically closer to the U.P. than the rest of Michigan.