DAFTER, Mich.— (September 28, 2022) Cloverland Electric Cooperative’s Board of Directors voted in support of the recommended rate increase from the cost-of-service analysis conducted earlier this year. A roll call vote yielded a unanimous 8-0 result with one abstention due to conflict of interest. The new rate – 5.4 percent increase for residential (82.1 percent of total co-op members; 40.4 percent of energy sales) and general service (21 percent of energy sales) and a 4.0 percent increase for large business and government (38 percent of energy sales) – takes effect in January 2023. Despite the five percent overall increase, Cloverland’s new rate will still rank among the lowest for all Michigan utilities.
To address member concerns well in advance of Tuesday’s vote, Cloverland’s President and CEO Mike Heise hosted community presentations August 23-25 in the cooperative’s three districts with options to join in person or virtually. Heise provided context to the rate increase by discussing inflationary pressures impacting vendors, contractors and suppliers causing cost increases for wire (up 229 to 412 percent) and transformers (up 273 percent). As a result, the cooperative has endured increases on prices and lead times on key components essential to keeping power flowing to its 34,000 members across five counties.
In his community presentations, Heise also reviewed his focus on the co-op’s financial health since he started in 2019. Working with the board and staff over the past three years, Heise enhanced the cooperative’s financial health from an equity ratio of 19.8% to the current 31.2% while keeping rates flat. The improved equity ratio allows the cooperative to borrow money from lenders at a much lower rate for capital work projects to maintain its infrastructure.
“While rates have remained fixed since 2017, costs have increased considerably in the last few years,” states Cloverland’s President and CEO, Mike Heise. “The 5% increase for 2023 is equivalent to an increase of 1% each year and enables us to maintain a strong financial position while enhancing our infrastructure.”
On average, residential members will experience an increase of $4.73 each month based on usage of 658 kwh. General service 1 members with an average monthly usage of 1,298 kwh will experience an increase of $8.54. General service 3 members with an average monthly usage of 10,041 kwh will experience an increase of $56.03. Large power/industrial members with an average monthly usage of 61,812 will experience an increase of $391.06.
The current facility charge, $23.75 for residential members, will increase slightly to $24. This monthly charge covers costs required to provide electric power to members other than purchased power costs and demand costs. These costs include more than 3,112 miles of overhead power line, 72,418 poles that hold the lines, 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.
“With energy markets fluctuating, it is incumbent to strengthen our position on power supply,” states Cloverland’s Chief Operating Officer, Pat Frazier who joined the cooperative in May and oversees the new generation and transmission cooperative, ARC Power, launched in 2021. “We look forward to growing ARC Power and positioning the cooperative to capitalize on infrastructure opportunities that will strengthen service and reliability for members.”
The cost-of-service analysis, conducted by GDS Associates (headquartered in Marietta, Georgia), assesses the revenue requirement for a utility and equitably allocates costs to various rate classes from residential to large power/industrial. This analysis provided a determination of the level of revenue responsibility of each class of service and the adjustments required to meet the cost of providing service.
Cloverland Electric Cooperative is a not-for-profit, member-owned utility located in Michigan’s Upper Peninsula. With hydropower making up nearly half its fuel mix, the cooperative powers 43,000 meters across 4,000 miles of power line for more than 34,000 residential and business members in Chippewa, Delta, Mackinac, Luce and Schoolcraft counties.
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Contact: Allie Brawley, director of communications & member relations 906-203-0838 | abrawley@cloverland.com