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We Energies says it has made an offer to one of its large industrial customers in the Upper Peninsula that, if agreed to, would end the latest dispute over ratepayer subsidies keeping the utility’s aging coal plant open in Marquette.
The most recent dispute over System Support Resource (SSR) payments keeping the Presque Isle Power Plant open surfaced when Cliffs Natural Resources — which left We Energies for an alternative energy supplier in 2013 because of steadily increasing rates — returned to We Energies as a customer on Feb. 1.
However, the utility has continued to collect SSR payments in escrow out of fear that Cliffs would leave for a different supplier again.
The Wisconsin-based utility is seeking formal assurances from Cliffs that it won’t leave again before Presque Isle is sold to a U.P.-based power company, likely by July, as part of a larger solution to reliability concerns there. If the mines agree to the latest proposal, which was made last week, We Energies will ask the grid operator MISO to stop the SSR payments.
A We Energies spokesman today called the offer to Cliffs a “significant development.”
An official in Michigan Gov. Rick Snyder’s office and the chairman of the Michigan Public Service Commission said last week that We Energies is “double dipping” by collecting rates from Cliffs and the SSR payments, which are paid for by Wisconsin and Michigan ratepayers and total about $8 million a month.
“We’ve consistently said that if there’s no agreement for them to stay on until (the plant is sold), we need to keep the SSR in place,” said Brian Manthey, We Energies spokesman. “We’re looking for a solution to enable us to get to that point where the sale is complete while at the same time not put customers in jeopardy.”
A Cliffs representative could not immediately be reached for comment.
Under Michigan’s 2008 customer choice law, iron ore mining and processing facilities in the U.P. can choose an alternative energy supplier at any time. For customers in the rest of the state, though, electric choice is capped at 10 percent of a utility’s load.
Manthey said it is “absolutely” possible that the mines could choose another energy supplier before the more comprehensive U.P. deal is inked by July. Manthey said it could take a “matter of a couple weeks” if Cliffs wanted to transfer utilities again.
Meanwhile, We Energies is scheduled to go before the Michigan Public Service Commission next week to show why it needs to collect the SSR payments after Cliffs returned as a full-requirements customer. It’s unclear what effect an agreement between Cliffs and We Energies may have on that case.
“To be clear,” Manthey said, “if the Mines do not agree to this solution and were to switch suppliers again in the next few months, we would all be back in the same perilous situation in the Upper Peninsula.”