Power company: God caused ice storm; we shouldn’t have to compensate customers
- Alpena Power Co. has asked the state to waive a requirement that it credit customers for long power outages caused by the historic March ice storm
- Two other affected utilities aren’t regulated by the state — and don’t plan to offer credits
- Alpena Power would lose up to $1.5 million on credits if it complied with the state’s requirement
ALPENA — Thousands of residents left in the dark and cold for days or weeks after a massive ice storm slammed northern Michigan last month may not get any financial help from their power companies.
By law, some customers are entitled to $40 a day for the inconvenience. Some were out as many as two weeks after the March 28 to 30 storm, which would put them in line for $560 in credits.
But Alpena Power Co. wants permission from the state to avoid paying its 16,445 customers who lost power any compensation, filing paperwork with the state saying that God — not the utility — is to blame for the outages.
“A storm of this magnitude is beyond the utility’s control,” the company wrote in a filing seeking the waiver.
Michigan has some of the some of the longest outages in the country, and customers of two other utilities impacted by the storm already won’t receive any relief.
State law requiring compensation does not apply to the unregulated electric cooperatives, and spokespeople for Presque Isle Electric and Gas Co-op and Cloverland Electric Cooperative told Bridge they have no plans to credit customers. Presque Isle, however, will waive late fees.
Those companies had 33,000 customers lose power. Consumers Energy plans to pay credits to its 26,000 customers who lost electricity, a spokesperson told Bridge.
The request from Alpena Power is the first test of a 2023 state rule that increased compensation for customers after outages. Before then, utilities had to issue a one-time credit of $25 if customers asked for it.
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The rule changed because of utilities’ historic poor performance after outages. Now, the credits must be issued automatically if at least 10% of customers are without power for four days.
There is a loophole: Utilities can ask state regulators for exceptions due to catastrophic events. None had sought an exception under the revamped rule until Alpena Power, said Matt Helms, a spokesperson for the Michigan Public Service Commission.
Ken Dragiewicz, president and chief operating officer of Alpena Power, defended the request, saying the March storm was 40 times larger than the next-biggest storm in company records.
“It’s unprecedented what we’re all going through, here,” he said.
The utility spent about $2.5 million restoring power after the storm, five times the company’s typical annual budget for storm restoration. And the days and days of outages will cost the company about $300,000 to $350,000 in lost sales because customers’ electrical meters weren’t running during the outage.
Paying the outage credits would cost Alpena Power another $1 million to $1.5 million, the utility said in a filing with the MPSC. That alone would equal as much as 5.5% of the company’s equity, according to the filing.
Dragiewicz conceded that his customers experienced hardships of their own. Many lost money on spoiled groceries, had to spend hundreds of dollars putting gas into their generators, or spent hundreds on hotel rooms.
But he said paying the outage credits would hamper his company’s ability to make the system more resilient to future outages.
“And, to me, that’s counterintuitive to what incentives are trying to accomplish,” he said.
The request has ruffled feathers among some on social media, but Alpena resident Anne O’Neal said she has no problems with it.
She was without power for 12 days, lost about $300 in food and spent nearly two weeks with her daughter in Harrisville. That was hard on her husband, who has dementia and gets disoriented in unfamiliar surroundings.
But O’Neal said she figures the money she’ll save from her meter not running is compensation enough, and she knows Alpena Power worked hard to get her electricity running again.
“The linemen worked 16-hour days,” O’Neal said. “It was an act of God.”
Alpena Power Co Petition to MPSC by jhinkley on Scribd
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