Commission examines billing by UPPCO

MARQUETTE — The Michigan Public Service Commission has completed a 90-day assessment into the estimated billing practices of the Upper Peninsula Power Company.

The inquiry was launched after the company filed for two-year extension of existing waivers of the monthly meter reading requirements under the MPSC’s billing rules applicable to residential and non-residential electric and gas companies, and a significant number of UPPCO customers complained.

The MPSC granted the waiver for one year, which will allow the practice of reading the bills every other month to continue up until Nov. 1.

Customer concerns

According to complaints filed with the MPSC, issues cited by customers include estimated billing from two to six times of a bill in which the meter was read — some cases causing wildly fluctuating bills.

One Copper Country customer told the MPSC in an email, “My husband and I both work, but we struggle daily. The UPPCO bills make it impossible to budget, as every other month we have no idea what the UPPCO bill will be,” she said. “I have had to choose between buying groceries and paying UPPCO, buying my husband’s medicines or pay UPPCO.”

Another customer lodged a complaint about a property in Houghton County.

“We see wildly fluctuating rates of electric usage that are always higher than it seems they should be, the customer email stated. “This facility is often vacant much of the time and is billed by UPPCO for kwh usage in excess of what my family uses with full time occupancy with freezers, water pump, etc. running. ‘

MPSC recommendations

The study, which was launched on Oct. 25 made several recommendaContinued from page 1A

tions that, if implemented, would reduce the number of higher than expected estimated bills for customers. These include:

– UPPCO should add questions to the new, or previous, customer intake process to properly identify if they will utilize electric heating.

– UPPCO should read meters at new premises on a monthly basis for three months for non-heating customers. For heating customers, the company should read meters for the initial three-month period, and then for the first three heating months as well.

“Staff would like to reinforce the importance and responsibility utilities have in providing customers with accurate billing information,” the MPSC report states. “Going forward, these modifications made by the company, should result in more accurate estimations consistent to customers actual usage.”

Company response

UPPCO Vice President of Business Development and Communications Brett French said the company is considering the MPSC recommendations.

“I can’t comment on what exactly we will do at this time, as we were just made aware of the recommendations — those would have to be evaluated,” French said.

Several issues with estimated billing had already been addressed by the company prior to or during the investigation, the MPSC report states.

– The company rectified an error in its billing information system in November 2016 that was incorrectly recording heating degree day data for electric heating customers (degree days record how cold or warm the outdoor temperature is in an area as compared to the mean temperature, using the standard temperature of 65 degrees Fahrenheit.)

– The company improved the process by which estimates are checked against a range then pulled them from the billing system for manual reviews. Prior to the correction some estimates outside the range went to billing rather than being flagged by the system for a manual review leading to potential inaccurate estimates.

– UPPCO also improved its estimation procedures by ensuring that estimates are based on a historical time period with actual (meter) reads. the report states. Previously, the company s estimation could rely on prior estimated reads to estimated usage. This was inappropriate, and staff is pleased that the company identified and fixed this issue.

French said customers never pay for electricity they don t use, and offered alternatives for those customers that would like a more exact meter reading.

“Customers can call or email us their meter reading before their meter reading date — that’s a known date, you can see it on the bill,” French said. “We have also provided our customers with an online portal to enter meter readings, we would encourage our customers, to enter it there.”

Some of the issues with estimates occurred during the course of reestablishing UPPCO’s independence after it was released from Integrys Energy Group Inc, a process that began in 2014.

“The SAP (industry software platform) project was a very significant project, as a part of that there were some billing issues and we worked to address those,” French said. “We continue to monitor how the system is performing and we will make adjustments as necessary as a part of our constant improvement process.”

Customer response to findings

Germfask resident and consumer energy advocate Gary Talarico said although he is pleased with the results of the investigation, he is only tentatively optimistic that things will improve for UPPCO customers.

“The report clearly found several violations of billing procedures and should be enough evidence to not allow UPPCO to get another waiver of Commissions billing rules,” Talarico said. “(But) keep in mind that what was recently filed is only a staff report, not a Commission Order. Hopefully, the Commission will deny another extension of waivers and hold the company strictly accountable to comply with its billing rules as do other investor owned utilities in the state.”

According to French, the process of reading the meters every month would add to the amount the company bills customers annually.

“The bottom line is, we serve 10 counties. If we were to read the meter every month it would add an additional $1,000,000,” French said.

Smart Solution

The transition to smart meters could solve problems caused by estimation errors altogether, French said. And the improvement may not be that far off. UPPCO is developing a plan to install smart meter technology — a project that may begin later this year.

Smart meters automatically capture information about electricity consumption and then transmit it back to the electric company, eliminating the need for an utility employee or customer to read the meter.

“The technology exists to do it, and do it well,” French said. “And we are developing a plan to deploy smart meters across the UPPCO footprint.”

The technology, French said, will increase system reliability, provide significantly improved customer service and eliminate the need to rely on estimated meter reading values.

“It would give us the ability to know when the power is out in a certain area — in real time almost,” French said.

UPPCO is in the development and evaluation of what he calls a formidable project, but customer engagement will be a large part of the process.

“Someone is not going to suddenly knock on your door ready to install a smart meter,” French said. “We are in the early stages and we see a number of advantages to us and to our customers  and they are significant.”

Rates still an issue

UPPCO customers stand to benefit from a drop in electric rates this year.

But it may not be enough to satisfy the most frustrated among them.

Talarico started a petition concerning UPPCO billing issues over a year ago — garnering almost 3,900 signatures to date.

French said residential customers will see an estimated 6 percent reduction in their electric rates thanks in part to $5.5 million in power supply savings that UPPCO has identified in an attempt to bring costs down.

“We’re not satisfied with the 6 percent decrease in rates because industrial customers are getting a 24 percent decrease,” Talarico said. “We want them to lower their rates.”

French confirmed during a phone interview that industrial customers would see a 24 percent decrease, with commercial customer bills likely to decrease by between 14 and 16 percent.

But many residential customers are looking for even more relief.

UPPCO customer Gary Talarico, a resident of Germfask, said despite the fact that he has upgraded his appliances and attempted to “go green,” high energy bills may force him to leave the area.

“I moved up here 10 years ago thinking this is where I want to spend the rest of my life because I’ve always loved it here,” Talarico said. “I’ve got the log home and the life I have always wanted, but UPPCO electric rates are forcing me to reconsider whether I can live my dream.

French said all UPPCO customers, including residential, commercial, industrial, heating and lighting are billed according to Rate Schedules and Terms of Service that have been set and approved by the Michigan Public Service commission.

Under the tariff, UPPCO has two rate districts for residential customers, the Interconnected System District with Rate Schedule A-1 serves the majority of UPPCO s residential customers and the with Interconnected System District Rate Schedule A-2 serving the Iron River District.

“The rates are not significantly different between the two districts,” French said.

The company, which serves about 52,000 customers throughout the U.P., many of them in rural areas, also has the highest electric rates of the nine investor-owned companies governed by the MPSC according to an MPSC rate comparison report dated Jan. 1.

A residential customer using 500 kilowatt hours per month would be billed as follows:

– Alpena Power – $75.44

– Consumers Energy – $80.63

– DTE Electric – $77.13

AEP (I&M) – combined $65.45

Northern States Power- $63.59

UPPCO – $113.85

UPPCO Iron River – $109.24

UMERC (formerly WEPCO) – $81.68

UMERC (formerly WPSC) – $68.81

Even reflecting the recent decrease, UPPCO s rate for residential customers are 10 cents per kilowatt hour more than the least expensive provider, and 7 cents more per kilowatt hour than the most expensive the MPSC report shows.

French said UPPCO s large, sparsely populated geographic footprint is a major contributor to the elevated rates.

“There isn t really a comparable territory in the state of Michigan,” French said. “Just think of the size of the 10 counties. Our rates are set at cost of service, but it just costs more to deliver electric service to a larger geographic area.”

Several factors contribute to higher rates in the Upper Peninsula. French said there are currently 18 providers of retail electric utility service with overlapping service territories, staff, resources and support systems in the Upper Peninsula.

“Consolidation of these providers could potentially contribute to lower rates,” French said. “Additional factors include low population density, declining consumption, aging infrastructure, post-retirement obligations and regulatory burdens.”

UPPCO encourages customers who are experiencing a higher monthly bill to utilize the company’s Energy Waste Reduction programs to look for opportunities to reduce their energy usage.

“Generally, customers who experience higher bills have charges that were incurred over multiple months and/or higher than normal energy consumption,” French said.

Where to go from here

UPPCO customers, especially in Germfask, just want lower rates, according to Talarico.

“The high rates negatively affect our real estate values and home saleability, reduce attractiveness of doing business and drastically lower quality of life for many, many people,” Talarico said.

The ideal outcome would be for UPPCO customers to be given a choice, he said.

“Germfask residents want to be allowed to switch to Cloverland (Electric Cooperative),” Talarico said. “Germfask Township has Cloverland on both sides.”

Cloverland power rates are less than 10 cents per kilowatt hour, according to the co-op s website  so an average monthly bill for 500 kilowatt hours would be less than $75.

The comparable bill for an UPPCO customer would be almost $114.

Talarico said customers recognize that UPPCO is in a tough spot when it comes to rates.

“The people that work for UPPCO are good people, they are our neighbors,” Talarico said. “The new owners were dealt a bad hand. They inherited a bad billing system, high rates, an excessive number of retirees, etc. But it s not up to the rate payers of UPPCO to bail them out of a bad deal.”

French said there are several contributors that could reduce customer bills in the coming months.

“There are a number of items working their way through the MPSC,” French said. “The effect on customer bills is not yet known.”