The Michigan Public Service Commission has formally approved the creation of a new gas and electric utility in the Upper Peninsula. The new utility, to be called the Upper Michigan Energy Resources Corp., will begin serving 40,000 customers in the region Jan. 1, 2017.

The approval marks the culmination of a series of complicated negotiations between WEC Energy Group Inc., whose subsidiaries Wisconsin Electric Power Co. and Wisconsin Public Service Corp., currently serve customers in the Upper Peninsula, and the state's PSC and governor's office.

Reached in October, the agreement calls for $255 million in new natural gas generation capacity in the area, along with the shuttering of the Presque Isle coal-fired power plant in Marquette, Mich. Commissioners in that state previously sought to insure that the establishment of the new utility would not raise rates for local customers and would result in investments necessary to maintain reliable electricity supplies in the region.

A report released recently by the 21st Century Infrastructure Commission, a state body created by Gov. Rick Snyder to develop a 50-year vision for water, energy, transportation and communications infrastructure, found that Michigan requires capital investments to ensure the safe and reliable provision of electricity in coming years. Energy supplies in the Upper Peninsula are of particular concern, the commission found. WEC President and CEO Allen Leverett said the formation of the new utility is the next step in the company's proposed generation solution to solve reliability and cost concerns in the region.