LANSING – On Friday, Michigan Attorney General Dana Nessel filed testimony with the Michigan Public Service Commission, arguing for significant reductions to Upper Peninsula Power Company’s (UPPCO) latest electric rate hike request. UPPCO filed its request with the Commission in March, seeking a 16% rate hike for all customers to raise $16.9 million in added revenue. The company also aims to raise its profit margin on infrastructure investments from 9.9% to 10.7%, potentially making it the highest return on equity in the state and possibly the nation.
UPPCO predicates its need for a rate hike on continued infrastructure investments and increases in operational expenses. A final order from the Commission is due at the end of this year or the beginning of next year. UPPCO’s last rate hike was approved in March of 2023.
Nessel filed expert witness testimony, arguing that UPPCO should, at most, be allowed to impose a $7 million rate hike on its customers, advocating a 60% reduction in the request from the utility company. In addition, the Attorney General argued that UPPCO’s return on equity should be limited to 9.86%, aligning it more closely with other utilities in Michigan. Attorney General Nessel challenged, in her testimony, seemingly unreasonable levels of operations and maintenance expenses espoused by UPPCO and additionally criticized an unjustified employee incentive compensation program that favors company shareholders at the expense of its customers.
“UPPCO already charges some of the State’s highest rates for electricity, making this request for greater profits unreasonable and unfair to Upper Peninsula residents who must bear these excessive rates,” said Nessel. “While incentivizing employees is commendable when designed to enhance customer value through better services, it is unacceptable when the incentive merely aims to boost shareholder earnings and is funded directly through customer rates. Ratepayers get next to nothing from that investment with the majority of the benefit going to employees and shareholders profiting off the utility monopoly.”
Since taking office, the Attorney General has helped save Michigan consumers over $3 billion by intervening in utility cases before the Commission. Last week’s testimony filed at the Commission reaffirms her commitment to affordable energy for consumers.
UPPCO sells electricity to approximately 53,000 customers in the Upper Peninsula.