MPSC approves continued pipeline upgrades, infrastructure investments for SEMCO Energy Gas Co.

Customer Assistance: 800-292-9555

The Michigan Public Service Commission, holding a Commission meeting today on the campus of Michigan Technological University in Houghton, approved a settlement agreement on SEMCO Energy Gas Co.'s application to increase its rates to continue updating aging pipelines and funding other critical infrastructure investments (Case No. U-22002). SEMCO Energy Gas serves about 300,000 customers across the Upper Peninsula and in the southern Lower Peninsula.

The company indicated in its application that capital investment and related expenses account for 97% of the company's request for rate relief, including SEMCO's project to build and operate the Keweenaw Connector Pipeline in the western Upper Peninsula that's designed to provide redundancy and improve the reliability of the UP's natural gas system.

The settlement agreement approves a rate increase of $33 million. The approved amount represents a reduction of more than 46% from the $61,251,191 SEMCO initially sought, citing increased costs driven by capital investments, depreciation, property tax increases, and rising operating and maintenance costs.

Rates will fund the continuation of SEMCO's gas main replacement program from 2027 through 2031, targeting the replacement of 37 miles per year of at-risk vintage plastic and steel pipe. In addition, SEMCO will continue its infrastructure reliability improvement program through 2031.

A typical residential customer using 10 dekatherms (Dth) of natural gas per month will see an increase of $2.80, or 3.16%, in their monthly bill effective Jan. 1, 2027. In addition, due to the approved Infrastructure Reliability Improvement Program ("IRIP") surcharge, customers will see an increase of 19 cents, or a 0.21%, starting Jan. 1, 2027. The IRM surcharge will increase annually until 2031, resulting in an additional increase of $2.17, or 2.29%, by Jan. 1, 2031, over the initial rate and IRIP approval. The utility last received Commission approval for a rate increase in December 2019.

The settlement agreement set an authorized rate of return on common equity of 9.85% and a capital structure of 50% equity and 50% debt. The utility had sought a rate of return of 10.75%.

All parties to the case, including the Michigan Department of the Attorney General, Retail Energy Supply Association, Association of Businesses Advocation Tariff Equity and MPSC Staff, signed the settlement agreement resolving all issues in the case.

MSPC ISSUES DIRECTIVES IN POLE ATTACHMENT DISPUTE BETWEEN UPPER MICHIGAN ENERGY RESOURCES CORP., INTERNET PROVIDER

The MPSC directed Upper Michigan Energy Resources Corp. (UMERC) to take actions to address complaints raised by Aspire Networks, doing business as Highline Internet, about the utility's pole attachment requirements as Highline installs high-speed internet lines in UMERC's territory in the western and central Upper Peninsula (Case No. U-22114). Highline filed the complaints against Wisconsin Electric Power Co. and UMERC, both owned by WEC Energy Group Inc., but the issues arise from use of UMERC's electric poles. The Commission agreed with Highline that UMERC's requirement that all lines have a minimum 15.5 foot of ground clearance is contrary to requirements for reasonableness under the law given lower minimum height requirements in the National Electrical Safety Code. The Commission also acknowledged unique characteristics of the UP, including prevalent logging that could necessitate higher minimum clearances. The Commission directed UMERC to justify the need for higher clearances to address specific considerations more narrowly tailored to the company's objective rather than applying generally to its entire service territory. The Commission, meanwhile, rejected Highline's request to find that UMERC's requirement of the use of costlier 6,000-pound strand wire for service drops over 120 feet is unreasonable and inconsistent with law. Among other actions, the Commission directed UMERC to revise its internal pole attachment standards as proposed by MPSC Staff, with immediate effect, subject to review in the utility's next rate case, and to expand its existing pole inspection program to include attachment inspections once every seven years. The Commission dismissed several other claims for relief from Highline.

COMMISSION APPROVES SETTLEMENT AGREEMENTS FOR UP UTILITIES

In other actions involving Upper Peninsula utilities, the Commission today approved:

• A settlement agreement governing UMERC's power supply cost recovery reconciliation (PSCR) for the year ending Dec. 31, 2025, setting a cumulative under-recovery of $53,349 as UMERC's 2026 PSCR reconciliation beginning balance (Case No. U-21601).
• A settlement agreement governing Upper Peninsula Power Co.'s (UPPCO) PSCR reconciliation for the year ending Dec. 31, 2025, setting a cumulative under-recovery of $4,381,465 as the utility's 2026 PSCR reconciliation beginning balance (Case No. U-21603).
• A settlement agreement on the reconciliation of UPPCO's energy waste reduction plan revenues and costs for the year ending Dec. 31, 2025 (Case No. U-22014). The reconciliation results in a net cumulative over-recovery of $376,184 through Dec. 31, 2025.

In addition to hosting the Commission meeting in Houghton, the Commission this week also took part in the North American Power Symposium hosted at Michigan Tech; toured energy infrastructure projects including SEMCO's Keweenaw Connector natural gas pipeline and the Republic Solar facility in being constructed on the former Republic Mine tailings area in Marquette County for UPPCO; and met with UP energy assistance providers, organizations coordinating energy waste reduction and weatherization efforts, and human services organizations.

The MPSC serves as an expert, impartial regulator committed to consumer protection, fairness and transparency. For information about the MPSC, visit www.michigan.gov/mpsc, sign up for its monthly newsletter or other listservs. Follow the MPSC on Facebook, X/Twitter, LinkedIn or Instagram.

To look up cases from today's meeting, access the MPSC's E-Dockets filing system.

Watch recordings of the MPSC's meetings on the MPSC's YouTube channel.

DISCLAIMER: This document was prepared to aid the public's understanding of certain matters before the Commission and is not intended to modify, supplement, or be a substitute for the Commission's orders. The Commission's orders are the official action of the Commission.

# # #