Upper Peninsula Power Co. has gained approval to increase customer rates beginning in 2025.

According to the Michigan Public Service Commission, a typical residential customer using 500 kWh a month will see an increase of $7.52, or 5.7%, on their monthly bill, effective Jan. 1.

In March, UPPCO filed a request for a $16.9 million increase in its electric rates that would have increased residential customers’ rates by 13.6%, said Michigan Attorney General Dana Nessel.

The MPSC last week approved a settlement permitting UPPCO to raise rates by $9 million. The amount approved represents a reduction of almost 47% from the utility’s initial request, the Commission said in a news release.

Under the agreement, UPPCO will donate $200,000 to organizations benefiting low-income customers within its service territory. The utility will confer with MPSC staff and Nessel’s office to identify appropriate organizations to receive the money and the parameters of the donation.

In addition to Nessel, intervenors in the UPPCO case were Citizens Utility Board of Michigan, Calumet Electronics Corp., Billerud Americas Corp. and the Association of Businesses Advocating Tariff Equity. MPSC staff also participated.

UPPCO supplies electric energy to a population of about 140,000 in Alger, Baraga, Delta, Houghton, Keweenaw, Marquette, Menominee, Ontonagon and Schoolcraft counties, along with an Iron River district.

The company released a Frequently Asked Questions document to explain the reasoning for its request. “The increase is required to address an under-recovery of revenue that is necessary to operate the electric utility,” UPPCO stated.

Factors cited included:

— Investments being made in existing infrastructure, such as poles, wires, electrical devices and technology.

— Construction of system upgrades and new infrastructure needed to support load growth and economic development.

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

— Increased operating expenses for such items as fuel, purchased power, tree trimming, supplies and maintenance.

The rate request did not include or reflect the impact of Michigan’s 2023 energy legislation that requires electric utilities to transition to 100% renewable and clean energy by 2040, the company said.

Customers can find energy assistance information on UPPCO’s website at https://www.uppco.com/residential/help-with-your-energy-bill/.

“This has been a busy year, with multiple utilities seeking rate increases at the same time, but my office has been vigilant in aggressively reviewing and litigating these cases to protect customers around the state,” Nessel said in a news release.