Electric rates to jump

By NIKKI YOUNK,Staff Writer

IRON MOUNTAIN - We Energies customers in Michigan will be paying up to 33 percent more on their energy bills in 2010 due to the $2.3 billion construction of two new generating units.

The company filed a rate increase request with the Michigan Public Service Commission on Thursday.

Roman Draba, vice president of regulatory affairs at We Energies, said that between 16 and 17 percent of the increase will be in effect for January, but additional rate increases need to be approved by the public service commission first.

"They will deliberate and determine the proper increase hopefully by July (2010)," said Draba.

Brian Manthey of We Energies Media Relations said that average residential customers will see about an $11.50 increase per month beginning Jan. 1, 2010. If the public service commission approves all of We Energies rate increases, customers will see an additional increase of $24 per month beginning in July 2010. Later in the year, there will be a final $1.50 increase per month.

The total per month increase would then be $37.

Currently, the average residential customer in Michigan pays $91.57 per month, said Manthey.

Draba explained that the "main driver" of the rate increase is the construction of two 615-mega-watt, coal-fueled generating units at Elm Road Generating Station in Oak Creek, Wis. Construction on the project began in 2005 and is scheduled for completion in December.

Since Michigan regulations prohibit energy companies from increasing rates before the providing station is in service, We Energies will have to implement the new rates all at once when the generating units are complete. However, Wisconsin has allowed the company to gradually increase rates over the past few years.

As a result, Wisconsin customers will see significantly smaller increases in 2010 in relation to Michigan customers. Also, rates for Wisconsin customers will increase at different intervals, said Manthey.

The average residential customer in Wisconsin currently pays $102.75 per month.

"This project was planned in the early part of the decade," Manthey said. "We couldn't predict back then that the rate increases would come at such a difficult time with the economy."

Local We Energies representative Rodney Miller added that a similar situation happened during a recession in the 1980s, when the company had just finished building a coal plant in Pleasant

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Prairie, Wis.

"The rate increases at that time weren't attractive, but we got through it and were able to offer competitive rates for the next 20 years" he said. "We're at that point again."

According to Manthey, the Elm Road generating units are part of We Energies' "Power the Future" campaign to increase energy reliability.

"Michigan and Wisconsin had severe reliability issues," he said. "There just wasn't enough power available, and you never knew when the power might go out on a warm day."

When We Energies did not have enough of its own facilities to generate power, it would have to purchase expensive energy from the open market, Manthey added.

"Our goal with this project is to increase reliability and reduce reliance on imported expensive power," he said. "When the economy turns around, we'll be ahead."

We Energies gets the majority of its power from coal, but it also utilizes natural gas, nuclear power, and renewable power.

Although there are several hydro plants in the immediate area, Miller emphasized that they do not generate the necessary power for local We Energies customers.

"Hydro plants provide less than one percent of our total energy," he explained. "It's important that we're part of this larger system and support projects like the Elm Road units."

We Energies serves approximately 26,000 residential and 2,500 industrial or commercial customers in the Upper Peninsula, primarily in the Iron Mountain-Kingsford and Marquette areas.

We Energies serves customers in 10 of 15 U.P. counties, excluding Luce, Mackinac, Chippewa, Schoolcraft and Keweenaw counties. The company owns and operates the Presque Isle Power Plant in Marquette.

Nikki Younk's e-mail address is nyounk@ironmountaindailynews.com.