Sault Ste. Marie, Michigan
Oct. 26, 2005
Lee Baatz - Assistant V.P. - Rates -
906-632-5170
EDISON SAULT SEES INCREASE IN PURCHASED POWER COSTS
Edison Sault Electric Company announced today that it has filed for an increase in its Power Supply Cost Recovery (PSCR) factor due to higher costs of purchased power. The increase for its customers has been filed with the Michigan Public Service Commission (MPSC), to take effect with billings issued in January 2006.
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. Beginning in January 2006, residential customers using 1,000 kilowatthours a month will see their bills increase from $61.31 to $71.85.
Lee Baatz, Assistant Vice President of Edison Sault, attributed the increase to higher wholesale energy prices. Edison Sault currently 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. While much of this purchased power is purchased under long term contracts, about a quarter of Edison Sault’s annual power requirements are purchased from the market to meet peak demands. The warm summer, high natural gas and oil prices, and to a lesser extent, higher coal prices, have all contributed to increased wholesale electric prices. For example, last year for the month of September, Edison Sault paid 5.7 cents per kWh at market prices for purchased power. This year the cost has risen to over 14 cents per kWh.
Market prices for electricity have been most directly impacted by rising natural gas prices. “Natural gas prices have increased sharply and are much higher than they were a year ago,” said Baatz. “Edison
Sault feels the impact of those higher prices as natural gas is being used as a source for generation to meet our peak demands.”
“Even with the increase, Edison Sault’s electric rates will continue to be among the lowest in the State of Michigan,” said Baatz. The Edison Electric Institute reports that a typical 1,000 kWh customer in Michigan in January 2005 was charged $80.45 for 1,000 kWh. Other utilities in Michigan will also be adjusting their rates, but Edison Sault’s proposed billing of $71.85 for 1,000 kWh would still be 11 percent less than what other customers are already paying for the same usage.
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