2026 Rate Adjustment

Cloverland uses a Cost of Service Study (COSS) to determine whether current rates are sufficient and fairly allocated among member classes. A COSS is a detailed financial and engineering analysis that evaluates how much it truly costs to deliver reliable electric service to residential, commercial, and industrial members.

The study considers factors such as power supply costs, infrastructure investment, operations and maintenance, debt obligations, and required financial benchmarks set by lending partners. It also ensures that each rate class pays its fair share based on how electricity is used and delivered.

When a COSS shows that revenues are no longer keeping pace with rising costs, Cloverland’s Board of Directors reviews the findings and considers rate adjustments. The goal is to maintain financial stability, protect reliability, and plan responsibly for the future.

Cloverland’s phased approach is designed to balance reliability, financial stability and member affordability. Spreading rate adjustments over multiple years helps avoid a single, larger increase while allowing the cooperative to keep up with rising power supply, infrastructure and operating costs. This approach provides members with greater predictability and time to plan, while ensuring Cloverland can continue delivering safe, reliable and affordable electric service.

The facilities charge is a fixed monthly charge that helps cover the cost of maintaining the electric system required to serve each member—regardless of how much electricity is used.

This charge supports infrastructure and services that must be in place 24/7, including poles, wires, transformers, substations, meters, billing systems, and customer service. These costs exist even when electricity usage is low.

Recovering a portion of fixed costs through the facilities charge helps ensure fairness, supports system reliability, and reflects the true cost of providing electric service.

Learn more about the facilities charge in this May | June 2022 message from President and CEO, Mike Heise.

Many of the costs required to deliver electricity are fixed, meaning they do not change based on how much energy a member uses. The electric system must be built, maintained, and ready to serve at all times—whether a member uses a lot of electricity or very little.

If all costs were recovered solely through energy use, members with lower usage would not contribute fairly to the infrastructure that serves them, and rates per kilowatt-hour would need to be higher and more volatile. Separating fixed costs (facilities charge) from usage-based costs helps create a more stable, equitable rate structure for all members.

Most Cloverland rates are made up of three parts:

• Facilities Charge: A fixed monthly charge that helps cover the cost of infrastructure and services required to deliver electricity to your location.
• Energy Charge: A variable charge based on the amount of electricity you use, which reflects power supply costs and other usage-related expenses.
• Demand Charge: A charge based on the highest level of electricity used at one time between 8 AM and 9 PM. Using multiple high-use appliances simultaneously—such as a dryer, oven and space heater—creates a spike in demand that drives this cost.

Together, these components ensure rates are fair, transparent and aligned with the actual cost of providing reliable electric service.

Electric rates directly support the infrastructure, people, and planning needed to deliver reliable power every day—and to respond quickly when outages occur.

Rate revenues help fund:

• Maintenance and replacement of infrastructure such as poles, lines, transformers, and substations
• System upgrades and modernization to improve resilience against severe weather and changing energy demands
• Skilled crews and equipment needed to safely restore power during outages
• Vegetation management to reduce storm-related outages
• Long-term planning and financial stability that ensure Cloverland can respond to emergencies and invest proactively rather than reactively

By setting rates that reflect the true cost of providing service, Cloverland can maintain a strong, reliable electric system while avoiding sudden or disruptive rate changes in the future. This approach helps protect both service reliability and the cooperative’s long-term ability to serve members.

Severe weather is one of the greatest challenges to electric reliability, especially in northern Michigan. Rates help ensure Cloverland is prepared before, during, and after storms so power can be restored as safely and quickly as possible.

Rate revenues support:

• 24/7 system monitoring and outage response coordination
• Line crews, equipment and materials staged and ready for storm restoration
• Training and safety programs that allow crews to work efficiently in hazardous conditions
• Mutual aid agreements with other utilities to bring in additional crews when large-scale outages occur
• Post-storm system repairs and hardening to reduce future outage risks

Maintaining strong financial health allows Cloverland to respond immediately to major weather events without delaying restoration efforts or compromising safety. Careful long-term rate planning ensures the cooperative is equipped to serve members when they need it most.

Cloverland Electric Cooperative is member-owned and not-for-profit, meaning it exists to serve its members—not to generate profits for shareholders. Any margins earned are reinvested into the system or returned to members as capital credits.

One key difference is service territory. Electric cooperatives like Cloverland often serve large, rural areas with fewer members per mile of power line. This means the cost of building, maintaining, and replacing infrastructure—such as poles, wires, and substations—is spread across fewer members than in more densely populated areas served by investor-owned utilities.

Despite these challenges, Cloverland works to keep rates as affordable as possible while maintaining reliability, safety, and long-term system health.

Going the EXTRA MILE

Did you know electric co-ops power fewer customers per mile of line compared to other utilities?

Electric Cooperatives serve 8 customer-members per mile.

Other electric utilities serve 32 customers per mile of line

• Home Energy Usage Tool: Available for free in your SmartHub portal, this virtual home energy audit helps you identify ways to save energy, understand your usage patterns, and view past and projected energy use.
• SmartHub: Our SmartHub mobile app and online portal puts your energy use at your fingertips. Track usage, set alerts and monitor your bill to stay in control month to month.
• Energy Optimization Rebates: Take advantage of more than 100 rebates to upgrade to energy-efficient appliances and equipment. These upgrades can lower energy use, reduce costs and improve efficiency.
• Beat the Peak: Cloverland’s peak demand hours are 8 a.m. to 9 p.m. daily. Spreading out the use of large appliances—like running the dishwasher later or doing laundry outside peak hours—can help manage demand. Our best tip: avoid running multiple high-use appliances at the same time.

Like utilities across the country, Cloverland is experiencing rising costs to maintain and operate its electric system, including power supply, materials, infrastructure, and day-to-day operations. Our recent (October 2025) Cost of Service Study indicated that without a rate adjustment, the cooperative would fall below the required financial thresholds – which impacts the co-op’s ability to borrow money to make infrastructure improvements. The rate adjustment helps ensure we can continue to provide safe, reliable service by continuing to improve our infrastructure.

Differing from the last one-time rate increase in 2023, the 2026 adjustment is part of a phased, multi-year approach designed to gradually align rates with the actual cost of providing service. Spreading changes over time helps avoid a single, larger increase while improving financial stability and predictability for members.

Electric systems must be built and maintained to meet the needs of our 34,000 members at all times — including during periods of highest use. Facility and demand-related costs reflect the infrastructure and capacity required to deliver power reliably. Aligning rates with these cost drivers helps ensure fairness so costs are recovered in a way that reflects how the system is used.

Demand rates are becoming more common because the cost of providing electricity today is driven not just by how much energy is used, but also by how much power is needed at any given time. Utilities must build and maintain enough generation, substations, and power lines to meet the highest periods of demand. Even if those peaks only occur for short periods, like homes running multiple appliances at once, Cloverland must be prepared to meet members’ needs. A demand component helps recover the cost of maintaining that capacity, ensuring the system remains reliable while aligning rates more closely with actual grid usage.

Demand rates also help keep costs fair among members. Without them, households that use large amounts of electricity all at once can drive infrastructure costs that are then shared by everyone, including members with steadier usage. By reflecting peak usage, demand rates help distribute the cost of maintaining the system more equitably while encouraging smarter energy habits—not necessarily by reducing electricity use, but by spreading high-energy activities over time.

At Cloverland, the demand charge is designed to be predictable and manageable. It applies only during the 8 a.m. to 9 p.m. timeframe and it is based on a member’s highest monthly usage period in each billing cycle. In many cases, members can reduce or avoid higher charges by staggering the use of large appliances, such as running the dryer, oven, and dishwasher at different times. This approach supports reliability and fairness while giving members greater control over their monthly bills.

Energy efficiency and conservation remain important and beneficial for members. However, many of Cloverland’s costs — such as maintaining poles, wires, substations, and power supply capacity — are fixed and don’t decrease when overall energy use drops.

The rate adjustment helps ensure the cooperative can recover these necessary costs while continuing to encourage efficient energy

Time-of-Use (TOU) pricing is one tool many utilities consider, but it requires specific technology, infrastructure, and careful evaluation to ensure it benefits members overall. Cloverland continually evaluates rate design options and programs, but any changes must balance cost, technology readiness, and member impact across our entire service territory.

Cloverland is currently in a power supply contract with Wisconsin Energy Corporation through 2029. Under this agreement, the cooperative incurs significant costs associated with system demand, making a Time-of-Use rate structure infeasible at this time. Cloverland continues to evaluate future rate design options, and TOU could be reconsidered as power supply contracts, member usage trends and system conditions evolve.

The primary goal is reliability and long-term stability. By aligning rates with actual costs:

• The cooperative remains financially strong
• System reliability and service quality are protected
• Large, sudden rate increases can be avoided in the future
• Rates are distributed fairly across residential and commercial members

As a not-for-profit member-owned cooperative, rates are set only to cover the cost of providing service — not to generate profits.