LANSING – The Michigan Public Service Commission today approved a settlement agreement that permits Northern States Power Co. of Wisconsin (NSP) to raise its electricity rates by $1.7 million in its service territory in two western Upper Peninsula counties.

The settlement agreement (Case No. U-21097) approves a total revenue requirement of $2,530,513, with a return on common equity of 9.7 percent and an overall electric rate of return of 5.89%.

The increased rates will take effect in customer bills beginning April 1. A typical residential customer using 500 kilowatt hours per month will see an increase of $8.69, or 12.4 percent, in their monthly bill. NSP, part of Xcel Energy Inc., serves about 9,000 electricity customers in Gogebic and Ontonagon counties.

As part of the agreement, NSP agrees not to seek a Michigan rate increase again before Jan. 1, 2024. The utility also will implement an earnings-sharing mechanism for 2022 and 2023 in which it will refund to its electric customers any multi-jurisdictional earnings above the authorized 9.7 percent rate of return on common equity.

NSP projected a revenue deficiency of $2,130,513 based and sought to recover $400,000 of depreciation and interest expense deferred in 2021 as a regulatory asset, consistent with Case No. U-20901. The settlement agreement permits NSP to amortize over 4 years the depreciation deferral total of $400,000.

Other terms of the agreement:

  • NSP will implement in 2022 a low-income assistance service program and agrees to donate $25,000 per year in 2022 and 2023 for low-income utility bill assistance.
  • NSP will perform tree-trimming or other vegetation management on at least 75 miles of overhead lines as part of its efforts to maintain service reliability.
  • The utility will provide to the MPSC a plan to reduce electric outages in its Michigan service territory and improve electric service reliability.  NSP also will provide comparative actual reliability data for its Michigan service territory for the relevant historic period.

The Citizens Utility Board, the Association of Businesses Advocating Tariff Equity and the Michigan Department of Attorney General were intervenors in the case. MPSC Staff also participated. All parties agreed to the settlement agreement.