2013-08-08 / Front Page

Electric co-op seeking new fee

Base ‘facility charge’ will be part of bill if approved

SAULT STE. MARIE – Cloverland Electric Cooperative recently filed a request with the Michigan Public Service Commission seeking a restructuring of its electric rates. The co-op is requesting change, which will add a “monthly facility charge” to bills, for what it says will allow for greater financial stability.

In a news release issued by the co-op, it’s noted that the rate filing is necessary due to declining electric sales, reduced revenues and the need to make significant infrastructure and system improvements across its service area. The co-op is also proposing investments of over $70 million in capital expenditures for electrical infrastructure improvements over the next four years.

The proposed rate increase is expected to boost revenues by $4.6 million or about 5.7 percent. The co-op is required by its lenders to maintain adequate margins and revenues since it is a memberowned, not-for-profit utility. Any margins above and beyond the cost of operations are returned to members.

“It is important that we continue to maintain the integrity and reliability of our combined system, not only for the benefit of our current member-owners, but for our children and those who will connect to our system in the future,” the coop’s president and CEO Dan Dasho said in the release. “It’s like the investment made by our grandparents 75 years ago when the infrastructure was first installed.”

The co-op explained a cost-of service study was initiated in 2012 and completed earlier this year which justified the rate structure change. The objective of the study was to introduce one set of properly allocated cost-based rates for the cooperative. This rate design helps the co-op recover fixed costs through a facility charge and not the energy charge.

The monthly facility charge, similar to the monthly charges billed by phone and cable providers for basic service, covers the fixed costs associated with providing electric service from the meter to the substation such as poles, wire, transformers, vehicles, property taxes, and tree trimming.

“It will enable members to take further advantage of our energy efficiency rebate programs which help them better control their energy use,” Dasho added.

The co-op submitted its rate filing to the MPSC on Aug. 5. An order is anticipated early next year with the approved rates, which may or may not be those proposed in this filing.

The co-op will provide further updates through its website (cloverland.com), member newsletter (Michigan Country Lines) and member informational meetings to be held in early October. For more information, visit cloverland.com or call the cooperative at 1-800-562-4953.

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