Upper Peninsula Power Company (UPPCO) customers will experience a rate increase of 5.7% on their monthly bill effective Jan. 1, 2025. According to a Sept. 26 release from the Michigan Public Service Commission (MPSC), a typical residential customer using 500 kWh a month will see an increase of $7.52, which will generate an additional $6.6 million dollars for the electricity provider in 2025. According to the U.S. Energy Information Administration, the average energy consumption per household is 900 kWh per month.

“The rate realignment charge will increase annually until 2033, resulting in an additional increase of $4.24, or 5.5%, by January 1, 2033,” the MPSC release says.

The increase, according to the MPSC, is intended to provide Upper Michigan Energy Resources Corp. (UMERC) revenue for infrastructure investments in new generation, maintaining safety and reliability and other factors.

Part of those infrastructure investments are tied directly to the recent passage of Michigan’s alternative energy drive to reduce carbon emissions to zero by 2040.

At an October open house in Ishpeming, Dan Freeborn, UPPCO’s manager of communications and external affairs, said the increase is due to PA 235’s goal to establish a 50% renewable energy standard by 2030, 60% by 2035 and 100% by 2040.

This is also stated on UPPCO’s Frequently Asked Questions (FAQ) page:

The increase is required to address an under-recovery of revenue that is necessary to operate the electric utility. The under-recovery is being driven by the following:

– Investments being made in existing infrastructure (poles, wires, electrical devices, technology, etc.) that enable the safe, efficient, and reliable delivery of energy to the customer.

– Construction of system upgrades and new infrastructure necessary to support load growth and economic development throughout the region.

– Significant increases in the cost of equipment, materials, supplies, and labor related to the company’s capital projects.

– Increased operating expenses (fuel for company vehicles, purchased power, tree trimming and vegetation management, contractors, non-capital materials and supplies, metering, routine maintenance performed on the company’s distribution and generation assets, etc.)

As part of an agreement reached between the MPSC and UMERC, beginning in 2026, UMERC agrees to opt into the state’s Low Income Energy Assistance Fund, which raises up to $50 million each year to fund energy assistance and energy self-sufficiency programs. UMERC also agrees to implement a residential income allowance and senior bill assistance program.

UPPCO already charges about 67% higher than the than the average rate in Michigan.

According to Find Energy, UPPCO averages 26.52 cents per kWh for residential electricity while, the average price in Michigan is 19.03 cents, both of which are higher than the national average of 15.77 cents.

Find Energy reports commercial customers pay 22.98 cents while industrial customers pay 8.58 cents per kWh.

UPPCO serves approximately 54,000 customers in 10 counties in the Upper Peninsula.