2007-02-10 / News

Edison Sault Customers Favored in Legal Opinion

Island Case Next Goes to PSC
By Karen Gould

An administrative law judge says that Edison Sault Electric Company should return $2,124,000 to its 23,000 EUP customers, and her decision will be taken into consideration by the Public Service Commission (PSC) when it makes the final ruling on the case. The judge, who sides with Mackinac Island in its protest over 2005 power recovery costs Edison is saying it should recoup, reached her opinion this month on the second of three complaints filed by Mackinac Island against the electric company. In the meantime, closed-door settlement talks continue between the city and the company that could resolve all three protests.

As it stands now, with her latest opinion, Michigan Administrative Law Judge Sharon Feldman is recommending the company return more than $4.6 million to customers. In her first opinion filed in November, Judge Feldman also favored the Island in its protest and said Edison should return approximately $2.5 million to customers. The judge has yet to offer an opinion on a third case, the Island's protest of Edison's 2006 Reconciliation Plan.

Judge Feldman's opinions on the three cases will be taken into consideration by the PSC. Whether her opinions will stand is up to the PSC, which will make a final ruling on each of the three cases.

The verbal understanding that electric company customers could receive as much as $347,000 in lower electric bills reached earlier this month between the city and company has not been finalized, as the parties put the agreement in writing. If the early January agreement can be formalized, then it will be sent to the PSC for its approval, as reported in The St. Ignace News January 18.

If the Island and Edison are not able to ink the deal that would settle all three pending protests filed by the Island, then the PSC will act on its own and take the administrative law judge's opinion into consideration before ruling on this protest and two other protests the Island has filed against the Sault Ste. Marie-based company.

Currently, the parties have agreed to postpone all proceedings for 30 days as they work to reach a settlement on all three cases, said Tom Evashevski, attorney for the Island.

In her latest opinion, Judge Feldman responded to Edison Sault's 2005 power supply cost recovery reconciliation request. The request, which is submitted by the company to the PSC, seeks to reconcile the power costs the company thought it would incur during the year with actual costs the company paid for purchased power.

Judge Feldman opined that the PSC should disallow capacity costs of $2,124,000, and if the PSC did not agree with her decision, then it should disallow $1,084,000, and if not that, then $347,000.

Her recommendation to disallow $2,124,000 was based on Edison Sault's failure to obtain prior approval from the PSC for a joint operating agreement amendment it made with Wisconsin Electric Power Company (WEPCo).

WEPCo is a wholly owned subsidiary of Wisconsin Energy Corporation. Wisconsin Energy Corporation is the parent company of Edison Sault.

Edison Sault had asked to recover $4,062,208 in power supply costs for 2005 through a surcharge to customers of 0.644¢ per kilowatt hour for a 12-month period. Edison Sault had an agreement in place to purchase power from WEPCo. While the agreement had been approved by the PSC, the amendment was never submitted for PSC approval. Judge Feldman said that the amendment called for a capacity charge and an energy charge that must be paid to receive power and the amendment called "for a majority of the company's power supply to be purchased from WEPCo."

Edison Sault acquired power from its hydro plant in Sault Ste. Marie, from the U.S. Army Corps of Engineers hydro plant, and from Consumers Energy Company.

Further, Judge Feldman said if the commissioner did not agree with her findings, then it should consider disallowing $1,084,000 because Edison Sault failed to demonstrate that its decision to enter into the amendment was reasonable and prudent.

Finally, she said if the com- mission decided that entering into the agreement was reasonable, she recommended that $347,000, which was the amount determined WEPCo overcharged Edison Sault under the terms of the agreement.

The filings were initiated by the Island and the city council had sought written and financial support from all local governments that had residents who were customers of Edison Sault. Only Clark Township offered written support. The Island now is responsible for its legal fees, which are estimated to be $65,000. About five percent of the money the company returns to customers will affect Mackinac Island residents.

The proposed settlement calls for approximately $347,000 to be returned to taxpayers. Other stipulations of the settlement include: A refund of $25,000 to be given to the Island is to be used for its attorney fees and Edison Sault would not seek reimbursement of attorney fees from rate payers. The company also would donate $25,000 to the City of Mackinac Island through the Mackinac Island Community Foundation. Plans to purchase outside power would follow a procedure proposed by the Island.

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