News Photo by Steve Schulwitz A large sign with the Alpena Power Co. logo sits in front of the utility company’s headquarters in Alpena on Thursday.

ALPENA — Alpena Power Co. says it has already incurred about $2.5 million in costs in its response to the late-March ice storm that left all of its customers without power and destroyed large portions of its electrical system.

The bills could contribute to a climb as the financial fallout from the storm continues to come to light and the bills arrive.

Now, the company has to provide billing credits to its customers who were without power, which could seriously impact the finances of the small utility provider.

The company says that if the Michigan Public Service Commission (MPSC) forces it to apply billing credits for the time customers were without power, the company, its electrical infrastructure, and customers could suffer again down the road if another large-scale blackout occurs.

Policy of the MPSC dictates that customers of utility companies that are owned by private investors must pay customers $40 per day for any power outage lasting longer than four days. Some customers of Alpena Power were without power for 10 days or more, and Ken Dragiewicz, the company’s CEO, said that could end up costing Alpena Power between $1 million and $1.5 million, which would likely impact operations and system maintenance.

Alpena Power has filed a petition with the MPSC seeking a waiver that would allow them to bypass the billing credit, claiming the historic storm was an “act of God” and something the utility company had no control over.

Dragiewicz said an outage is considered catastrophic when 10% of the utility’s customers are without power for an extended period of time.

When crafting its annual budget, Dragiewicz said, the power company usually allocated about $500,000 for power restoration costs, but the storm forced Alpena Power to spend about $2.5 million to get power up and running.

Dragiewicz said Alpena Power is the second smallest investor-owned utility in Michigan and doesn’t have the financial might of larger power companies, and the large expenditures and loss of revenue would have an impact on it.

“We went through more than five times the amount we normally budget in just two weeks,” he said. “If we are forced to pay the credit, it will impact our investment in the system and the maintenance of it. That will hurt us when we need to plan for another large weather event or need to respond again.”

If the MPSC agrees to a waiver, Alpena Power will be able to continue to invest in its system and make it even more reliable than it has been for many years, Dragiewicz said. If not, then Alpena Power will issue the credits and explore options and alternate funding options if they are available.

Dragiewicz said it could seek federal aid via the Federal Emergency Management Agency if it is made available or seek help from the state. He said both could be challenging because it is not a local government, which qualifies for assistance more easily.

Dragiewicz also didn’t want to speculate if Alpena Power would seek the permission of the MPSC for a rate hike on customers that would help it recapture its lost revenue.

“It is too early to speculate what the MPSC will do and what will or won’t happen,” he said. “We are looking at this from every angle to see what we can do. But, in the short term, we need to pay our bills.”

Dragiewicz said customers who were without power for many days can expect a smaller electric bill than normal, which is good for them, but not for the utility. He said that because the company had no way to send power to people’s homes and businesses, it can’t charge them for it. Dragiewicz said Alpena Power lost about $350,000 in lost electrical sales during the blackout.

“We literally couldn’t sell power to anyone, and that is how we make our money to be able to sustain the system, pay our employees, and just operate overall,” he said.

The MPSC is expected to hold a pre-hearing on the waiver request on May 18, but it is unknown when it will rule on the waiver.

Steve Schulwitz can be reached at 989-358-5689 or sschulwitz@TheAlpenaNews.com. Follow him on X @ss_alpenanews.com.