All electricity customers in the Eastern Upper Peninsula will now buy their power from a nonprofit cooperative, as Cloverland Electric Cooperative will buy Edison Sault Electric Company in Sault Ste. Marie from Wisconsin Energy Corporation, the cooperative announced Thursday, October 29. The transaction is contingent upon member and regulatory approval. Assuming the acquisition is approved by both members and regulators, the deal is expected to close by mid-year 2010.

The combined utility would serve approximately 42,000 accounts, roughly doubling the size of the not-for-profit, consumer-owned electric cooperative. The acquisition would improve Cloverland Electric’s operational efficiency and preserve local control of energy resources, including the Edison Sault hydroelectric plant in Sault Ste. Marie, the company said. The cooperative buys about 40% of its power from the hydroelectric plants on the St. Marys River and purchases the rest of its supply from Wisconsin Energy.

Presently, the service territories of Cloverland Electric and Edison Sault Electric overlap in the Eastern Upper Peninsula. Cloverland serves 19,500 homes and businesses in Chippewa, Mackinac, Luce, and Schoolcraft counties. The cooperative is headquartered in Dafter and maintains district offices in DeTour and Newberry.

The companies have already worked together on energy purchases, Cloverland’s top manager pointed out.

“Cloverland Electric has served the Upper Peninsula for more than 70 years, and for much of that time we have worked closely with Edison Sault Electric for the mutual benefit of our consumers through our combined wholesale power purchases,” said Dan Dasho, Cloverland executive vice president and general manager.

The biggest consumer benefit of this transaction will be helping to control rate increases over time, Mr. Dasho said.

“Prices for electricity will go up over time due to inflation and other factors beyond our control, including the climate-change legislation currently under consideration in Washington,” Mr. Dasho said. “While we can’t stop these increases, we can take actions to ease their effects. This acquisition will give us new efficiencies that will encourage long-term rate stability for all energy consumers in our region.”

That sentiment was echoed by Gale Klappa, chairman, president, and chief executive officer of Wisconsin Energy.

“Without this transaction – given that Edison Sault has not filed for a base rate increase in almost 25 years – Edison Sault would have needed to request higher retail rates in the not-too-distant future,” Ms. Klappa said. “The combination of the two utility operations should allow these increases to be mitigated.”

Employees at Edison Sault will become Cloverland Electric employees.

“Both Cloverland Electric and Edison Sault Electric are very efficiently staffed organizations,” Mr. Dasho said. “We’ll need the skills and experience of the people at both companies to deliver the high-quality service our members and customers expect. We look forward to welcoming the employees of Edison Sault Electric into the Cloverland Electric family.”

The International Brotherhood of Electrical Workers, which represents Cloverland Electric employees, and the United Steelworkers, which represents Edison Sault Electric employees, will continue to represent their respective bargaining units after the sale.

Cloverland Electric will conduct a member meeting to explain the transaction, discuss its benefits, and hold a member vote Thursday, November 12, at Dafter Township Hall. Registration will start at 6 p.m., and the business session will begin at 7 p.m. Members will receive an official notice and additional information by mail before the meeting.

For the sale to be approved by members, it must receive a simple majority of all votes cast at the meeting. Votes will be counted and certified by the cooperative’s legal counsel, and the results will be announced on Cloverland Electric’s Web site and in news media.

Should the transaction receive approval, Edison Sault Electric customers will become member-owners of Cloverland Electric, gaining voting rights, board representation, and the opportunity for patronage capital refunds, which are the margins of a cooperative that are returned to members over time. This year Cloverland Electric will disburse approximately $1 million in capital credit refunds to its members.

In addition to its principal electric business, Cloverland Electric operates Lighthouse.net, a subsidiary providing broadband service to the Upper Peninsula.

Wisconsin Energy, based in Milwaukee, serves more than 1.1 million electric customers in Wisconsin and Michigan's Upper Peninsula and more than 1 million natural gas customers in Wisconsin.