Michigan utility looks to skip paying outage bill credits after ‘act of God’ ice storm

ALPENA, MI — A northern Michigan utility is looking to dodge a requirement it issue $40 bill credits to customers who went days without power after the catastrophic ice storm in late March.

Alpena Power Co. argues the storm that snapped hundreds of thousands of acres of tree branches like twigs and cast the region into darkness was an “act of God” causing widespread blackouts it could not possibly have avoided.

Automatic outage credits for customers could total between $1 million and $1.5 million, a hefty sum for the power company serving only 16,750 customers in the Alpena area, the utility estimated in an April 17 filing with state regulators.

“In my opinion, a storm of this magnitude is beyond the utility’s control, and following utility best practices for ice loading design and vegetation management would not have prevented large scale, long duration outages,” testified its President and Chief Operating Officer Ken Dragiewicz in the filing.

“The outage credits in this circumstance are also unduly economically burdensome when compared to the size of Alpena Power Company.”

The utility is requesting regulators with the Michigan Public Service Commission issue a temporary waiver giving it a pass from outage credit rules, meant to ensure speedy restoration of electric service after outages and spur accountability for power companies.

During blackouts defined as “catastrophic,” like those that struck wide swaths of northern Lower Michigan, utilities must issue a $40 credit after customers go four days without power, or if they experience six or more interruptions in a year.

The credits aren’t designed to fully insulate Michiganders from losses like spoiled food and medicine, or the expense of a hotel stay, but they offer some level of compensation when utilities leave customers in the dark for prolonged periods.

The requirement applies only to investor-owned utilities, like Alpena Power Co. and Consumers Energy, each hit by the crippling storm. Electric cooperatives and municipal utilities, also widely affected, aren’t regulated by the state, and therefore aren’t subject to the rules.

Part of Alpena’s argument to skip paying out the bill credits rests on the scale of the destruction wrought by the storm, acknowledged to be the worst in a generation.

Read more: Northern Michigan ice storm was ‘orders of magnitude worse’ than Blizzard of 1978

The utility experienced two “grid-scale” outages knocking out the system of high-voltage transmission lines that feed into its local power grid and plunging the vast majority of its customers into darkness, according to an Alpena Power Co. filing.

The extreme weather caused an estimated 97 million customer outage minutes, a sum 40 times larger than the next most destructive storm it experienced in nearly 30 years of utility records.

Working with mutual aid line crews, National Guard members and private contractors, the utility was able to restore power to all customers only on April 10, nearly two weeks after the storm first struck on March 28.

A similar story played out across northern Michigan and prompted an emergency declaration from Michigan Gov. Gretchen Whitmer, who is also seeking federal disaster aid for the region.

Alpena Power replaced 32 poles and 18 transformers and estimates hundreds of miles of service wire were affected, even in locations that were appropriately trimmed of trees, per its filing.

Read more: ‘Legion of bark beetles’ expected to gobble Michigan’s ice-damaged trees

It’s looking for a reprieve from the outage credits, which may be sought because of problems caused by an unanticipated “act of God” or “major system failure.” State rules cite disasters like earthquakes and tornadoes, as well as terrorist attacks, but do not specifically address ice storms.

Without smart meters automatically notifying the utility when outages occur, Alpena Power Co. estimates it would take 60 days to calculate outage duration customer-by-customer for the purposes of issuing credits, according to Dragiewicz’s testimony.

He did not return a voicemail and email seeking comment.

For a small utility like Alpena, the credits would be a big expense. If scaled up to a major Michigan utility, they would equate to hundreds of millions of dollars, Dragiewicz testified.

A spokesperson for the Public Service Commission, which will rule on the utility’s request, declined to comment on the pending case.