We Energies overcharged its customers, panel says

The Presque Isle Power Plant in Marquette is shown. A federal oversight committee ruled this week that We Energies’ collection of nearly $23 million in subsidy payments to keep the facility operating was not just or reasonable.

MARQUETTE — A federal oversight committee has determined We Energies had overcharged ratepayers by nearly $23 million to keep the Presque Isle Power Plant in Marquette operating to ensure electric reliability in the Upper Peninsula.

In the case, the state of Michigan has disputed the financial collection — known as System Support Resource payments — by We Energies and its parent company WEC Energy Group, based in Milwaukee. The Federal Energy Regulatory Commission this week found that the collection “was not just or reasonable, and that the company had altered the date of an invoice in calculating the payment,” according to a press release from the Michigan Agency for Energy.

The Midcontinent Independent System Operator, which oversees the electric grid in several U.S. states and parts of Canada, has 45 days to make a recommendation to FERC on how much money, if any, should be refunded.

“Today is a great day in our continuing efforts to lower power costs for Michiganders in the U.P.,” Gov. Rick Snyder said in the release. “We stood up for the Upper Peninsula and we won.”

FERC officials made no findings as to whether We Energies committed fraud or engaged in manipulation when a date was changed on an invoice, but the matter was referred to the FERC’s Office of Enforcement for further examination.

“We are thoroughly reviewing the order, “ Amy Jahns, spokesperson for WEC Energy Group, said in a statement. “We will work closely with the commission’s Office of Enforcement for a conclusion of the matters referred to that office.”

FERC’s ruling represents a nearly 50 percent reduction in WEC’s costs to run the Presque Isle plant, the release states.

Officials have said in the past the refund, if any, would go back to the electric customers who made the SSR payments, including Cleveland-Cliffs Inc.

In 2013, Cliffs’ Empire and Tilden mines, located in Marquette County, left We Energies for another electric provider.

We Energies attempted to suspend operations and later close the Presque Isle plant, but MISO forced the plant to remain open for reliability purposes. Having lost its largest customer, We Energies then sought the SSR payments.

Cliffs in early 2015 announced it would return as a customer of We Energies as part of a multiparty agreement, resulting in discontinuation of the power company’s request for the SSR payments. Part of that agreement was for the parties to work toward a long-term solution for the U.P.’s power issues, which later resulted in the creation of the Upper Michigan Energy Resources Corp. and its plan to construct two new power plants in the central U.P. that, if approved by the state, would ultimately replace the Presque Isle facility. Those matters are pending before the Michigan Public Service Commission.

The state of Michigan has challenged the Presque Isle plant SSR payments in more than 20 dockets at FERC, and the Michigan Agency for Energy has advocated for changes at MISO to make the process of establishing SSR charges more transparent.

“We need to end this system of secret deals to keep this conduct from happening again,” Valerie Brader, executive director of the MAE, said in the release. “I was extremely pleased with (Thursday’s) FERC ruling, including the fact they will investigate further, and I call on them to quickly take action on changes that would allow the state to put these kinds of charges to the smell test before they end up on our citizens’ bills.”

Ryan Jarvi can be reached at 906-228-2500, ext. 270, or rjarvi@miningjournal.net.