Alpena Power Company seeks rate hike – thealpenanews.com

Report on Alpena Power Company’s 2026 Rate Adjustment Proposal

Executive Summary

Alpena Power Company (APC) is preparing a proposal for the Michigan Public Service Commission (MPSC) to adjust its maximum Power Supply Cost Recovery (PSCR) rate for the 2026 fiscal year. The proposed adjustment reflects rising nationwide energy consumption and market volatility. The company’s strategy, centered on long-term procurement contracts, aims to mitigate these pressures and maintain service stability, aligning with several key United Nations Sustainable Development Goals (SDGs), particularly those concerning affordable energy, resilient infrastructure, and sustainable communities.

Proposed Rate Adjustment Details

The PSCR plan outlines a proposed increase in the maximum chargeable rate per kilowatt-hour (kWh). The adjustment is detailed as follows:

• 2025 Authorized Rate: 8.2 mils per kWh ($0.0082/kWh)
• 2026 Proposed Maximum Rate: 13.5 mils per kWh ($0.0135/kWh)

This request is subject to a comprehensive review by the MPSC to ensure the plan is prudent and reasonable, in accordance with Public Act 304 of 1982.

Market Dynamics and Procurement Strategy

APC operates as an energy distributor, purchasing power from a national market system rather than generating it. The company’s leadership has identified significant market trends influencing its cost structure:

1. Increasing National Demand: After a period of stagnation, nationwide energy consumption is rising, leading to a tighter supply and upward pressure on prices.
2. Market Volatility: As supply tightens, market prices become more volatile, posing a risk to cost consistency for consumers.

To counteract these challenges, APC employs a strategic hedging strategy by securing long-term energy contracts, with some agreements extending to 2040. This approach is designed to insulate customers from short-term market fluctuations. However, the company remains exposed to some market risk when actual energy usage exceeds forecasted amounts, necessitating purchases at fluctuating market prices.

Implications for Sustainable Development Goals (SDGs)

The proposed rate adjustment and underlying strategy have direct implications for several SDGs:

• SDG 7: Affordable and Clean Energy: The core challenge is balancing energy affordability (Target 7.1) with the economic realities of a tightening market. APC’s long-term contracts are a mechanism to ensure a reliable and stable energy supply, a key component of SDG 7. The rate increase underscores the financial pressures on maintaining universal access to affordable energy.
• SDG 9: Industry, Innovation, and Infrastructure: The annual PSCR review process represents a regulatory framework designed to support reliable and resilient energy infrastructure (Target 9.1). APC’s proactive procurement strategy is an industrial approach to safeguarding essential services against market shocks, thereby enhancing infrastructure resilience.
• SDG 11: Sustainable Cities and Communities: Access to reliable and predictably priced energy is fundamental to the economic and social fabric of the Alpena community. The company’s stated objective to “even out that volatility” directly supports the goal of creating resilient and sustainable communities (Target 11.B) by protecting households and businesses from price shocks.
• SDG 12: Responsible Consumption and Production: The report highlights that rising national consumption is a primary driver of cost increases. This implicitly points to the importance of promoting sustainable consumption patterns and energy efficiency (Target 12.2) to alleviate pressure on the energy supply system.

Public Engagement and Transparency

In line with principles of transparent governance (SDG 16), the PSCR plan is available for public review. Stakeholders and members of the public are invited to participate in a virtual pre-hearing to review the proposal.

• Event: Pre-hearing for Alpena Power’s PSCR Plan
• Date: November 19
• Time: 9:30 a.m.
• Format: Virtual

SDGs Addressed in the Article

1. SDG 7: Affordable and Clean Energy

   • The article’s central theme is the cost and reliability of electricity for the community of Alpena. The discussion revolves around Alpena Power Company’s request to increase the maximum charge per kilowatt-hour, which directly impacts the affordability of energy. The company’s strategy of using long-term contracts to mitigate market volatility and ensure consistent costs for customers relates to providing reliable energy.

2. SDG 11: Sustainable Cities and Communities

   • Access to affordable and reliable electricity is a fundamental basic service necessary for the functioning of a sustainable community. The decisions regarding energy pricing and supply stability, as discussed in the article, have a direct effect on the residents and businesses in Alpena, impacting the overall sustainability and quality of life in the community.

3. SDG 16: Peace, Justice and Strong Institutions

   • The article highlights the role of the Michigan Public Service Commission, a state-level institution responsible for regulating utility companies. The commission’s mandate to review Alpena Power’s plan to ensure it is “prudent and reasonable,” along with the public nature of the plan and the pre-hearing, demonstrates the principles of effective, accountable, and transparent institutions and participatory decision-making.

Specific SDG Targets Identified

SDG 7: Affordable and Clean Energy

• Target 7.1: By 2030, ensure universal access to affordable, reliable and modern energy services.
  • The article directly addresses the “affordable” and “reliable” aspects of this target. The proposed increase in the maximum electricity rate from 8.2 mils to 13.5 mils per kWh is a matter of affordability. The company’s efforts to use long-term contracts to “even out that volatility in the market” and keep costs “as consistent as possible” are measures to ensure a reliable energy supply for its customers.

SDG 11: Sustainable Cities and Communities

• Target 11.1: By 2030, ensure access for all to adequate, safe and affordable housing and basic services…
  • Electricity is a “basic service” essential for modern life. The article’s focus on the pricing and regulation of this service in Alpena connects directly to ensuring the community has continued access to it at a price deemed “prudent and reasonable” by a regulatory body.

SDG 16: Peace, Justice and Strong Institutions

• Target 16.6: Develop effective, accountable and transparent institutions at all levels.
  • The Michigan Public Service Commission acts as an accountable institution. The article describes its function: to “approve maximum rates” and annually review the Power Supply Cost Recovery (PSCR) plan to “verify that ‘everything we did was correct.'” This regulatory oversight mechanism is a clear example of an effective and accountable institution in practice.
• Target 16.7: Ensure responsive, inclusive, participatory and representative decision-making at all levels.
  • The article mentions that the company’s PSCR plan is “available for the public to view” and that the public is “allowed to view a pre-hearing.” This demonstrates a commitment to transparency and provides a mechanism for public participation, aligning with the principles of inclusive and participatory decision-making.

Indicators for Measuring Progress

1. Maximum charge per kilowatt-hour (kWh)

   • The article provides a direct, quantifiable indicator for energy affordability (Target 7.1). It explicitly states the current authorized rate (8.2 mils per kWh) and the requested rate for 2026 (13.5 mils per kWh). This metric can be tracked over time to measure changes in the affordability of electricity for consumers.

2. Implementation of a public regulatory review process

   • The existence and function of the annual Power Supply Cost Recovery (PSCR) plan review by the Michigan Public Service Commission is an indicator of an accountable institution (Target 16.6). The article confirms this process is in place, as Alpena Power is “required to have their PSCR plan reviewed by the commission annually.”

3. Public access to information and participation mechanisms

   • The article implies indicators for participatory decision-making (Target 16.7). These include the public availability of the PSCR plan and the scheduling of a public pre-hearing. The article states, “The company’s PSCR is available for the public to view. The public is also allowed to view a pre-hearing.” These actions serve as measures of transparency and public inclusion.

Table of SDGs, Targets, and Indicators

Source: thealpenanews.com