Cherryland Electric proposes fee increase

Jan. 19—GRAWN — Cherryland Electric Cooperative is considering rate changes that utility leaders said are a more fair way to charge its customers, but which some users claimed would squeeze those who scrimp on power usage.

The cooperative board will vote Monday on changes that would have residential customers pay an extra $10 for their monthly service charge, bringing it $28 per month, according to the utility. That fixed charge would cover costs like power line maintenance, staffing, buildings and equipment.

Cherryland Electric also would reduce its energy charge to 11.7 cents per kilowatt-hour from the current 11.91 cents.

Those changes would take effect March 6 if approved, and customers would first see the changes in April, said Rachel Johnson, the cooperative's member relations manager.

She was among a few dozen, including customers and utility board members, who gathered in the co-op's headquarters basement for an input session Wednesday. They listened as utility General Manager Tony Anderson explained the changes, and several asked questions.

Big users would pay less under the new rate while smaller users would see an increase on their bill of $10 or less, according to the utility. For example, a customer who uses 250 kilowatt-hours in a month would pay $7.48 more, while one who uses 1,500 would pay $5.15 less.

The utility's average residential customer uses 700 kilowatt-hours per month and would see a monthly increase of slightly less than $3, Johnson said.

That's more power than Judy Nemitz uses, she said. The East Bay Township resident said she thought the proposed rates were unfair to people like her who work to conserve energy.

Another audience member, Shannan MacG. of Traverse City — she only gave part of her last name — said her bill also would jump more than the average user, and noted that those who use no power would pay more than 50 percent more.

Frank Siepker, the co-op's engineering and operations manager, said there are a few zero-kilowatt-hour users, but they're mostly summer homes or hunting camps, not the typical residential user. Most would see a much smaller increase, he said, although Nemitz replied that she wouldn't.

While that didn't seem fair to Shannan MacG., Anderson replied that the current rate structure is not fair.

"You've been subsidized in the past by people who use more electricity," he said.

That was a choice the utility made several years ago, but now it could remove that subsidy, Anderson said. Plans to gradually increase that charge didn't work, and the rate increase would be the first since 2018.

Two factors are behind the change — one is a 2022 study of how the utility's revenues cover its costs, Johnson said. It found that electricity rates were partly funding what should be covered by the fixed monthly charge.

On top of that, inflation pushed up the costs those flat charges are supposed to cover, Johnson said. Underground cable is about 50 percent more expensive and both transformers and bucket trucks cost about 30 percent more, for example.

"We knew we were going to have to have a rate increase in order to cover costs," she said earlier on Wednesday. "In addition to that, the cost of service study showed we were collecting a lot of fixed costs through our volumetric charge."

Johnson said before the meeting the proposed change isn't meant to be punitive; the utility still encourages its customers to use less power and offers rebates and other incentives to cut demand. But the increased monthly charge would ensure people are paying their "fair share."

Consumers Energy and Great Lakes Energy Cooperative, the two other major electric utilities serving the northwest Lower Peninsula, already changed residential customers' rates.

Great Lakes Energy customers pay $2 more for a fixed monthly charge that covers maintenance, distribution and staffing costs, bringing it to $34.21, according to the utility. Residential customers pay an extra 0.7 cent per kilowatt-hour, bringing it to 11.5 cents. Both went into effect Jan. 1.

A Great Lakes Energy residential customer using 800 kilowatt-hours per month should pay an extra $7.90, according to the co-op's November newsletter.

Consumers Energy's summer rate has residential customers paying more during peak power usage hours on summer weekday afternoons. From June through September, those customers pay about 1.5 times more for power between 2 p.m. and 7 p.m., up to 21.2 cents per kilowatt-hour versus 16.2 cents per kilowatt-hour during non-peak times and weekends. That lower rate applies all day October through May.

That's been part of the utility's standard residential rate for about two years, said company spokesman Josh Paciorek. The logic is that customers pay less for the 19 hours each summer weekday when energy costs are less. Power prices increase in the afternoon as demand increases.

Cherryland Electric is considering a similar, voluntary program that Johnson said could be introduced in fall 2023.

Participants would pay 20 cents per kilowatt-hour during peak hours and 9.6 during non-peak, Anderson said. Peak hours would be 2-6 p.m. May through September and 5-9 p.m. October through April.

New meters the company will install over three to four years for a total of $7 million would make that much easier, Johnson said. They would report back usage every hour.

Anderson said the utility's current electronic meters are failing as they age out, and estimates put the cost of those failed meters at $200,000 to 300,000 per year.

Gary Ettinger of Grawn said he thought the new rates seemed to undercut efforts to conserve electricity. He asked why the utility didn't consider a tiered rate where those who use more, pay more per kilowatt-hour.

That could hurt the co-op's economics since it needs to sell a certain amount of power to keep the price low, Anderson said. And Johnson said the time-of-use charge would be the closest to what Ettinger suggested, since it charges customers more for power when it costs the most.

Afterward, Ettinger said he thought the presentation was good and he approves of the job Cherryland Electric does. But he didn't feel like his concerns were heard that night.

"All it was was — we're doing this, and Monday it's final," he said.

Not so, said Johnson, who noted the input session was only part of a nine-month process that included other input and there's a public hearing coming Monday.

Board President David Schweitzer echoed this, noting a lot of time has been put into considering the increase, but it's still good to hear input.

"It makes us more sensitive to our decision-making in the future and it lets us know people are paying attention," he said.

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