By Chris O’Malley

The Federal Energy Regulatory Commission has ordered hearing and settlement procedures on MISO’s proposed cost allocation for the Presque Isle Power Plant, which would cause steep rate increases for residents in Michigan’s Upper Peninsula.

The Nov. 10 ruling (ER14-2860, ER14-2862) comes after a flood of ratepayer and political pushback to MISO’s system support resource agreement (SSR) that blocks Wisconsin Electric Power Co. (WEPCO) from closing the aging and costly generator near Marquette, Mich.

MISO sought the SSR last year after determining that the 400-MW coal-fired plant was needed for reliability of the region’s grid.

Upper Peninsula ratepayers would shoulder the bulk of the estimated $100 million annual cost to keep Presque Isle in operation. Michigan and Wisconsin utility regulators say the cost of keeping the plant in operation is unreasonable. (See Michigan: FERC Favors Transmission in Presque Isle Dispute.)

The Michigan House of Representatives on Nov. 6 passed a resolution calling on FERC to reverse its acceptance of MISO’s cost allocation, which it said would saddle Upper Peninsula residents with 99.5% of the Presque Isle costs. The resolution asks FERC to divide the cost in “a more equitable manner.”

Dozens of cities and towns drafted similar resolutions and filed them with FERC. A number of businesses in the Upper Peninsula complained that their monthly costs would rise by several hundred dollars a month and that they would be forced to cut jobs.

FERC’s files were filled with complaints from residential ratepayers, as well.

“I am a semi-retired elder on a very limited income. Having to pay $30 to $50 more on my electric bill would be an extreme hardship for me and many others like me,” wrote Ruth Pickem, of St. Ignace, Mich.

“If Wisconsin does not have to pay because they do not benefit from the plant, then we should not have to either. We do not benefit from this plant! Close it!” Pickem added.

The uproar over Presque Isle even triggered bipartisan legislation from Michigan lawmakers in Congress, Democratic Sen. Debbie Stabenow and Reps. Dan Benishek (R) and Gary Peters (D).

“The Power Act,” introduced earlier this month, would essentially require FERC to overrule decisions by the North American Electric Reliability Corp. if a review found it resulted in “unjust and unreasonable” rate increases.

The bill’s sponsors said NERC’s intervention “upended” an earlier FERC finding that Upper Peninsula ratepayers should bear only 14% of Presque Isle’s operating costs.

WEPCO has expressed interest in adding new generation in the Upper Peninsula.

Other studies have been conducted into the possibility of building new transmission to the Upper Peninsula, although that would likely cost hundreds of millions of dollars. A combination of both new transmission and generation remains under debate.

A hearing date in the Presque Isle SSR matter has yet to be scheduled.