Why Our Electric Rates Are Going Up

Posted: September 14, 2022 at 8:57 p.m.

When something is transparent, light shines through it. Sometimes you need to examine it from several angles to see it correctly. In the spirit of transparency, we want our members to know that electric rates will be going up – taking effect in January 2023.

Since I started in 2019, Cloverland’s financial health improved significantly thanks to the hard work of our staff and focus of our board of directors.

TIER – Times interest earned ratio developed by dividing earnings before interest and taxes and dividing it by interest payments on long term debt; OTIER- Operating times interest earned ratio, which only takes operating income into account, not income from outside sources. TIER and OTIER demonstrate to lenders that the co-op is bringing in enough revenue to pay its debts and reinvest in the co-op. Borrowers require the co-op to have a minimum TIER of 1.25 and OTIER of 1.1.

Despite the challenges from the pandemic, we completed studies on right-of-way maintenance/vegetation management, Cloverland’s hydro facility and SCADA system. We have streamlined our power supply to conserve capacity expenses, increased revenue from renewable energy credits, enhanced unity on our board of directors and brought on a power supply expert to ensure our cooperative remains strategically positioned for future industry challenges. In addition, we created Cloverland Cares to give back to the communities we serve and launched ARC Power to manage existing generation while positioning the cooperative to capitalize on additional infrastructure opportunities.

While we aggressively improved the co-op’s performance, rates have remained stable since 2017 – even through the pandemic when material costs increased exponentially. General economic forces along with changes to the electric industry are adding up. The cost of providing the quality of service and reliability that our members expect is rising with them.

Your board of directors will vote on the recommended overall 5% increase from our cost of service study at the September 27 meeting. We aim to keep the increase as low as reasonably possible without sacrificing safety, reliability or service to our members. As we examine our circumstances from several perspectives, we will base decisions on the healthy growth of our cooperative and best interests of our members.

Times are tough. Adding more strain to your wallet is the last thing we want to do. But in the long run, the cost of not raising rates now is certain to be higher later with greater impact on our infrastructure if continue to defer maintenance as it will erode system reliability.

Cloverland will continue to remain transparent. We will continue to aim to keep our rates among the lowest in Michigan. In the meantime, we encourage you to keep looking in the direction where the light shines the brightest.


Mike Heise
President & CEO