Wisconsin Public Service files deal to supply power to new affiliate

Wisconsin Public Service Corp. (WPS Corp) on Oct. 17 filed with the Federal Energy Regulatory Commission an executed power purchase agreement between it and Upper Michigan Energy Resources Corp. (UMERC), a WPS Corp affiliate that is taking over transmission assets in Michigan’s Upper Peninsula.

WPS Corp asked that this filing be accepted effective the later of Jan. 1, 2017, or the date state and federal regulatory approvals are obtained for UMERC.

On June 14, WPS Corp and Wisconsin Electric Power Co. filed with the Michigan Public Service Commission and the Public Service Commission of Wisconsin a request for all approvals necessary to establish UMERC, an affiliated Michigan jurisdictional utility serving electric and natural gas customers exclusively in Michigan. Following the establishment of UMERC, Wisconsin Electric will transfer its Michigan electric distribution assets and WPS Corp will transfer its Michigan electric and natural gas distribution assets to UMERC.

In connection with the establishment of UMERC, Wisconsin Electric and WPS Corp find it necessary to enter into a number of FERC-jurisdictional agreements with UMERC and to terminate several other existing agreements that will no longer be needed. These agreements will include power purchase agreements between UMERC and its Wisconsin affiliates, and wholesale distribution service agreements between UMERC and its Wisconsin affiliates.

UMERC will provide electric service to former WPS Corp customers in what will be known as the “WPSC Rate Zone” and to former Wisconsin Electric customers in what will be known as the “WEPCo Rate Zone.” UMERC is entering into two PPAs for the provision of electric service in the WPSC and WEPCo Rate Zones. These PPAs will provide “slice of system” benefits and costs for the WPS Corp and Wisconsin Electric generation systems. The PPAs are formula-based, with two formulas – one for capacity costs and one for energy costs. The PPAs are not intended to be long term. Rather, they are intended to serve as a bridge until a long-term generation solution for the Upper Peninsula of Michigan can be reached. This filing concerns the WPS Corp PPA.

UMERC will not own any generation assets. Therefore, the WPS Corp PPA permits WPS Corp to continue to utilize its generation fleet in Wisconsin to serve customers in Michigan. The PPA also includes transmission charges and an interruptible credit calculation.

Also on Oct. 17, Wisconsin Electric filed with FERC an executed Agreement for Wholesale Distribution Service with UMERC. It also requested that this filing be accepted effective the later of Jan. 1, 2017, or the date state and federal regulatory approvals are obtained for UMERC.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.