UPPCO Officials Discuss Impact of Presque Isle and Renewables
Posted by Lake Superior Community Partnership on November 19, 2014
Ishpeming – Upper Peninsula Power Company (UPPCO) released information to help its customers and the public better understand the projected impacts from the Presque Isle Power Plant on the utility. UPPCO officials also shared some thoughts on renewable energy.
“There have been a lot of predictions regarding how much of an impact keeping the Presque Isle Power Plant open will have on customers of U.P. energy providers,” said Barb Siehr, chief executive officer of UPPCO. “What has been lost in the dialogue is how the impact will vary by utility. This is a complex issue with a lot of moving parts and sure to change. We will continue expressing our concerns about the charges being mandated to UPPCO.”
The Midcontinent Independent System Operator (MISO) is the organization responsible for maintaining the reliability of the electric grid in the Midwest. MISO determined that Presque Isle was needed to operate the grid within applicable reliability standards and subsequently designated it a System Support Resource (SSR). Presque Isle will likely retain its SSR designation until either new transmission reinforcements or new generation facilities are built. Every company providing electric service to U.P. customers will pay for the costs to keep Presque Isle in service. The amount an electric company and its customers pay will differ based on projected benefits of the Presque Isle SSR and use of the transmission system.
As has been reported, the cost of the original SSR agreement between MISO and the owner of Presque Isle was $52 million from March 2014 through February 2015. The annual cost of a recently-approved replacement SSR agreement for Presque Isle is $97 million ($52 million plus an additional $45 million). However, the $97 million amount could be reduced through a future order by the Federal Energy Regulatory Commission (FERC), which is the entity charged with oversight of the electric industry.
MISO originally allocated only 1.4 percent of the costs of the Presque Isle SSR to UPPCO. The Public Service Commission of Wisconsin petitioned FERC, claiming that this allocation methodology was unfair because it resulted in Wisconsin customers paying a disproportionate share of Presque Isle SSR costs. FERC agreed and MISO was forced to change its allocation methodology. This resulted in UPPCO being required to pay 5.66 percent of the Presque Isle SSR costs.
Another fact Siehr said has been overlooked in discussions on this issue is that UPPCO is being assigned costs for not only Presque Isle but also two other MISO-designated SSR generation facilities in White Pine and Escanaba. UPPCO is being assigned approximately 94 percent of the $3.5 million for Escanaba SSR costs and approximately 12 percent of the $4.5 million for White Pine SSR costs. Costs from the Presque Isle, White Pine and Escanaba SSRs are now being collected through the Power Supply Cost Recovery factor on customer bills.
Siehr stressed that the current MISO allocation can change based on further action by FERC and stakeholders. Assuming no changes to the status quo are made, UPPCO projects that that costs for the Presque Isle, White Pine and Escanaba SSRs — taken together — will likely result in a projected increase of approximately $0.011/kWh (or roughly 1.1 cents). The average residential customer using 500 kilowatt-hours of electricity per month would see an increase of approximately $5.50 per month beginning January 1, 2015.
“Out of concern for all our customers, UPPCO will continue to make its voice heard before FERC,” said Siehr. “UPPCO has been recognized as a key stakeholder, most notably by being granted intervener status in the dockets concerning this issue before FERC. We will continue working with lawmakers and regulators on this issue. UPPCO is monitoring this situation closely and constantly evaluating options to minimize the impact of the three SSR generation facilities on our customers.”
A recent FERC ruling determined that SSR compensation under the Presque Isle replacement SSR agreement “has not been shown to be just and reasonable.” UPPCO expects further FERC action on this matter. In the meantime, Siehr said UPPCO will continue providing safe and reliable electricity, dedicated customer service while reducing costs and showing customers how to save money on their energy bills. She also said UPPCO will continue being a proud community supporter in communities the company serves.
Turning to another matter, UPPCO Chief Operating Officer Keith Moyle provided some of the utility’s views about renewable energy and adding possible new generation in the future. He reiterated that Upper Peninsula Power Company has been providing clean, renewable energy for years through its hydroelectric generation facilities. These facilities, Moyle noted, provide numerous other benefits besides renewable energy, including recreational opportunities available to the public on land and water and being part of the local tax base.
Moyle said UPPCO recognizes that renewables represent one piece in the overall energy picture. However, Moyle noted the intermittent nature of some renewable energy at this time. He said energy users need to know the power will be there at the moment they need it.
“Sometimes rates for renewable energy are presented in discussions that reflect only the actual cost to produce the power,” said Moyle. “You also have to factor in transmission and distribution costs and charges that must be paid to MISO to use the regional transmission grid.” Any proposal we evaluate must be price competitive for our customers.”
He added that UPPCO is willing to listen to anyone with a proposal for generation, including renewable energy. However, Moyle said cost is always at the forefront for UPPCO when looking at proposals. “
Moyle urged people to visit the utility’s website at www.uppco.com to learn more about the Presque Isle, White Pine and Escanaba SSRs and energy efficiency resources available to UPPCO customers.
