Manager’s Message

Michael (Mike) Heise

President and Chief Executive Officer of Cloverland Electric Cooperative.

An Explanation of the Facilities Charge

 

Going the extra mile graphic. Did you know electric co-ops power fewer consumers per mile of line compared to other utilities? Electric cooperatives serve eight consumer-members per mile of line. Other electric utilities serve 32 consumers per mile of line.

As a member of Cloverland Electric Cooperative, you make an investment in the co-op every time you pay your bill. In addition to the amount you pay per kwh based on your individual usage, your payment covers the monthly facilities charge that helps us cover the expenses of maintaining our overall electric system. Combatting cyber security threats and maintaining poles, wires, substations and co-op equipment takes strategic planning and significant resources. The facilities charge

What is a facilities charge? A facilities charge covers all fixed cooperative expenses that do not vary based on members energy usage. These costs must be covered in order to ensure power is available when you need it. A facilities charge covers power generation, power transmission, substations, transformers, electrical equipment, utility poles, power lines, fleet trucks, snowmobiles and four-wheelers, parts and maintenance work, insurance covers and property taxes.

essentially ensures that all equipment operates properly and staff is trained and ready so the lights turn on when you need them.

Although the name of this fee may vary, facility or fixed charges are necessary for all electric utilities for rate equity among ratepayers, or members in our case. For each of the 43,000 meter points in Cloverland’s service territory, we make a significant investment and we must maintain this investment to ensure reliability and safety.

As a utility, we need a system of meter reading, billing and member services functions in place to take care of our members. This system includes trained people, office facilities and state-of-the-art technology to provide the level of service expected by cooperative members. The cost of these facilities and services must be recovered, even if you’re a seasonal member who elects not to buy any electricity during a specific period. Similar to a cell phone or cable bill, there is a monthly charge to continue the service regardless of how much you use the service.

The facility charge on your energy bill pays for the costs required to provide electric power to you other than the purchased power costs and demand costs. These costs include more than 3,112 miles of overhead power line, 72,418 poles that hold the line up, 922 miles of underground cable, 38 substations, a fleet of 219 vehicles and tracked/all-terrain vehicles, plus all the associated hardware required to operate the cooperative’s distribution system spread across five counties in the Eastern Upper Peninsula.

Regardless of how much electricity a particular family uses, the se costs of delivering power to that house is the same. As a not-for-profit electric cooperative, this concept is widely used to assure that the operational costs should be spread fairly and equitably across all of our members, regardless of the level of electricity use. That is why every member pays the facilities charge each month to cover basic operational costs. All members are charged the same amount for the cost of operation since all members benefit from the same service. In essence, this gives each co-op member an equal share in Cloverland’s operation based on the type of service.

Cloverland Electric Cooperative Facilities Charge. In addition to a kwh charge for usage, the cost of Cloverland's services are billed on a per-member-per-month basis rather than in proportion to the amount of electricity purchased. $23.75 per residential meter, $25.60 per meter for single-phase general service, $40.60 per meter for three-phase general service, $110 per large power meter. Cloverland's base kwh usage rate is $0.09/kwh (as referenced in the March|April Connections). With the facility charge factored in for an average housefold usage of 750 kwh, the total average residential rate is $0.1289/kwh. Even with the facility charge added in, Cloverland still has the second lowest average price for residential customers per kwh in the state of Michigan.

The facility charge is an average cost to provide the first kWh of service to a member and it covers the cost the cost of owning, maintaining and supporting these facilities. These fixed costs do increase every year and this component of our rate needs to be periodically adjusted. The cooperative’s board of directors determine our rate structure and we are currently reviewing the results of our recent cost of service study to determine the appropriate facilities charge and rate per kwh to cover the increasing costs to maintain our infrastructure. We appreciate and value the investment that you make in the co-op each month, and we strive to use that investment wisely for the benefit of all members of our community.

Kind regards,
Michael (Mike) Heise

By The numbers