Houghton Residents pay highest electric rates in Michigan

UPEDA Energy Series, by Abhilash Kantamneni


Residents of Houghton County pay the highest electricity rates in the state of Michigan, an analysis of annual utility reports[i] filed at Michigan Public Services Commission (MPSC) has revealed. Houghton is served by two of the three most expensive Michigan electric utilities: Upper Peninsula Power Company (UPPCO) and Rural Electrification Association (OCREA).


Figure 1: Average residential electricity rates by utility in the state of Michigan in the year 2013[i]. Utilities serving the Upper and Lower Peninsulas are mutually exclusive. The three most expensive utilities OCREA, Alger-Delta and UPPCO are unique only to Michigan and the Upper Peninsula. The three cheapest utilities AEP, WPS and XCEL have large service areas outside Michigan.

While an average residence[i] in Houghton pays an annual electric bill of $1,260 under UPPCO or $1,460 under OCREA, a similar American household would only pay $727.  According to data[ii] compiled by the U.S Energy Information Administration (EIA), the effective electric rates of UPPCO ($0.21/kWh) and OCREA ($0.24/kWh) are higher than the average retail residential price of electricity of all American states, with the only exception of Hawaii ($0.38/kWh). 


Since 2001, the average cost of electricity has increased by 74% across Michigan but has more than doubled for utilities that serve Houghton.

Figure 2: Increase in average residential electricity rates from 2001 to 2013 by utility in the state of Michigan. 

Additionally, according to the latest US Census data[i], Houghton County experiences lower household incomes and significantly higher poverty levels than Michigan and National averages. (Table 1)

Table 1: Comparison of average electric costs, median household incomes and poverty levels of Houghton County with Michigan and National averages. 

The combination of a large number of heating degree days[i] with high electric rates and relatively low incomes in this area makes investing in energy saving technologies and appliances difficult for the high proportion of the population that struggles to make ends meet.


Residents of Houghton County have scheduled open community meetings on Tuesday, Aug 26, 6:00pm-8:00pm at Sheldon Grill, Houghton and on Wednesday, Sept 17, 6:30-9:00pm at the Finnish American Heritage Center in Hancock, as a community wide effort to rethink their energy use and implement creative strategies to reduce energy costs. The meeting is open to all members of public.   



[1] [1] Michigan Public Service Commission 2013 electric utility company annual reports http://www.michigan.gov/mpsc/0,1607,7-159-16377_41871-214349--,00.html 

[1] Michigan Public Service Commission History of Rates Statistical Data http://www.dleg.state.mi.us/mpsc/electric/download/rates1.pdf 

[1] For an average monthly consumption of 500kWh, close to the actual average monthly residential consumption under UPPCO: 486 kWh. Source: UPPCO 2013 annual report to MPSC http://www.dleg.state.mi.us/mpsc/electric/annualreports/2013/uppco521filing2013.pdf 

[1] Average Retail Price of Electricity to Ultimate Customers by End-Use Sector, U.S Energy Information Administration http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_6_a 

[1] United States Census Bureau County Profiles http://quickfacts.census.gov/qfd/states/26/26061.html 

[1] National Oceanic and Atmospheric Administration, Northern Michigan Climatology  http://www.crh.noaa.gov/apx/?n=climatology_hdd