As UPPCO Seeks Rate Increases, Michigan’s AG Signals a New Approach to Consumer Advocacy
When Michigan’s new Attorney General, Dana Nessel, stopped by the Institute for Public Utilities (IPU) forum in East Lansing last week, her remarks commanded intense interest from an audience of regulators, environmental and consumer advocates, human services officials, and utility company staff.
She wasted no time in pointing out that she was the first AG to visit the IPU since the days of “Eternal General Frank Kelly,” the pioneering AG who served Michigan for 37 years and earned a legacy of being a citizen watchdog. She went on to say that her office was intervening in rate cases currently before the Michigan Public Service Commission (MPSC), which must approve rate increases for for-profit utilities.
Later that day, Nessel’s office issued a press release touting her IPU visit that quoted her as saying:
“Affordability is as important to me as it is to the residents of this state,” Nessel added. “I want them to know I have their back. Rates in this state are extremely high and we must do a better job of keeping them affordable, especially for our state’s most vulnerable populations.”
Then, on Tuesday, the AG’s office announced that it had filed testimony in UPPCO’s request for a $10 million rate increase, which is currently being considered by the MPSC. Nessel is recommending that UPPCO not collect more than an additional $3.5 million from customers annually.
You can see the testimony for yourself here, but a word of warning: reading through MPSC filings is not for the faint of heart. Here are just a few takeaways from the document:
- The AG’s office sharply rebukes UPPCO’s request to reduce a $26 million rate rebate that it agreed to when the company was sold from Integrys to Balfort Beatty Infrastructure Partners in 2014. UPPCO is seeking the reduction because the company claims it earned less than it had expected from 2016. The AG’s filing claims that a rebate reduction would amount to raising rates retroactively.
- The AG’s office also takes issue with how UPPCO plans to pass along savings to customers from the Tax Cuts and Jobs Act of 2017. They argue that the rebate should extend back to taxes that the company began saving on Jan 1, 2018, which is when the tax cuts took effect — UPPCO’s savings calculations begin later.
- According to the AG’s filings, UPPCO is reporting $11,700 in annual expenses related to a supplemental retirement plan for “certain highly paid former executives of the Company.” Nessel’s office is recommending that UPPCO not be allowed to recover this expense from its customers.
Interestingly, the AG’s testimony also states:
The absence of a discussion of other matters in my testimony should not be taken as an indication that I agree with those aspects of UPPCO’s rate case filing. The narrow focus of my testimony is, instead, a consequence of focusing on priority issues within the available resources.
In other words, we suspect there may be other issues with UPPCO’s request — but we didn’t have the time or resources to examine them all.
Consumer advocates will welcome AG Nessel’s intervention, and the clear, early signals she is sending to utility companies that there’s a new sheriff in town. But UPPCO customers are already paying some of the highest rates in the country. Many customers would argue that *any* rate increase is unreasonable, and that, if anything, UPPCO should be looking for ways to reduce costs.
The question becomes: how far is the Attorney General’s office willing to go to protect UPPCO customers?
