December 20, 2002

The Michigan Public Service Commission today approved a settlement agreement and authorized Upper Peninsula Power Company to increase its rates to its electric customers by $4,868,158 annually, or about 9.9%.  On August 2, 2002, UPPCo filed a request to increase its rates for electric service by $9,938,841 annually, as well as requesting an interim rate increase of $5,017,080 annually.

The Commission approved the rate increase because UPPCo's current electric rates would result in a revenue insufficiency for the company, based on projected 2003 test year data.  Included in the settlement agreement, UPPCo will be required to expend $9 million annually on distribution operation and maintenance and any unexpended monies will be refunded to its customers through a credit on customers' bills.  Today's order also approves a "Green Rate" that allows customers to voluntarily purchase power from renewable energy resources.

UPPCo's residential customers using 500 kilowatt-hours (kWh) of electricity per month will see a monthly increase of about $5.12.  Individual customer increases will vary, based on actual customer electric use.  Commercial and industrial customers will also see an increase based on actual electric use.

MPSC staff, UPPCo, Michigan Technological University and Smurfit-Stone Container Corporation negotiated the settlement agreement.

UPPCo headquartered in Houghton, Michigan provides electric service to about 50,130 customers.

The MPSC is an agency within the Department of Consumer and Industry Services.


Case No. U-13497

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