PRESS RELEASE
Sault Ste. Marie, Michigan
Jan 3, 2007
Lee M Baatz - Assistant Vice President - Rates, Edison Sault Electric Company
- 906-632-5170
Edison Sault Electric Company announced today that it has filed for an increase in its Power Supply Cost Recovery (PSCR) factor from 1.245 cents/kWh to 1.763 cents/kWh due to higher costs of purchased power. The proposed increase for its customers has been filed with the Michigan Public Service Commission (MPSC), to take effect with billings issued in January 2007.
The PSCR allows Edison Sault to pass through to its customers any increases or decreases in the cost of obtaining power supply from outside sources. The PSCR is a simple pass through of outside purchased power costs to customers and does not include any profit, margin, salaries or any type of expenses.
Lee Baatz, Assistant Vice President of Edison Sault, attributed the increase to two items; forecasted dramatically lower amounts of water available for hydro generation and higher wholesale energy prices. Edison Sault normally uses low-cost hydro generation for about 40% of the electricity it sells. The remaining 60% must be purchased from other outside (and higher cost) sources. For 2007, it is forecasted that only 36% of Edison Sault’s power needs will come from hydro generation, while 64% will come from more expensive purchased power. The Corp of Engineers has recently issued a notice stating that Lake Superior was at its lowest fall level in 80 years, resulting in significantly less water outflows. The lower amount of water available for hydro generation and the higher wholesale purchased power costs are the major reasons for the increase in electric rates.
Beginning in January 2007, residential customers using 1,000 kilowatthours a month will see their bills increase from $71.85 to $77.03, an increase of 7.2%. “The water available for generation for Edison Sault’s hydro plant is now at 44% of capacity. If Edison Sault’s hydro generation reached the average for the last ten years, the rate increase percentage for our residential customers would be reduced from 7.2% to 2.9%,” said Baatz.
“Even with the increase, Edison Sault’s electric rates will continue to be among the lowest in the State of Michigan,” said Baatz. Edison Sault’s proposed billing of $77.03 for 1,000 kWh would still be about 16 percent less than what other companies charge for the same usage.
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