2016-10-27 / Front Page

Electricity Rates Will Be Increased

By Stephanie Fortino

The fixed electricity rate, or facility charge, for all Cloverland residential electricity customers will be increased from $12 a month to $23.75 a month, and a standard energy usage rates was set for all residential customers at 9.149¢ per kilowatt-hour, a slight increase for former Edison Sault Electric customers and a large decrease for old Cloverland customers. The Cloverland Electric Cooperative Board of Directors voted 6-3 to restructure the rates to cover rising costs and normalize rates for all members across the cooperative. Other rates for small commercial operations and large power users were changed, as well.

The Cloverland board held its meeting at the St. Ignace Middle School Monday, October 24, and nearly 60 members of the public attended, and a few spoke, urging Cloverland to not raise electricity rates because the increases will be difficult for people on fixed incomes to absorb.

Voting against increasing the rates were Jason St. Onge of Mackinac Island, Carmine Bonnacci of Sault Ste. Marie, and John Sawruk of Sault Ste. Marie. Mr. St. Onge said he wouldn’t support the rate increases, which he feared would happen when the company became member regulated. Mr. Bonnacci said the board should take more time to thoroughly investigate the rate increases. And Mr. Sawruk suggested the company could establish different rates for residential customers in dense urban areas versus rural areas, to better reflect the costs of providing electricity.

The Cloverland board was presented with three options to increase its rates, all incorporating a “times interest earned ratio” (TIER), which is the calculation a company uses to measure its ability to meet its debt obligation, said Cloverland CFO Bob Malaski. Raising the rates keeps the cooperative viable, he said. The three options for the 2017 rates were 2 TIER, which would add $5.68 million to Cloverland’s budget, 1.8 TIER, which would add $3.98 million to Cloverland’s budget, and 1.6 TIER, which would add $2.27 million to Cloverland’s budget. The board chose the smallest increase, 1.6 TIER.

The 1.6 TIER increase equates to a 2.9 percent rate increase, overall.

The increase will be spread over the company’s two forms of rates for residential customers - the fixed facility charge for infrastructure and the variable energy charge for electricity consumption.

The facility charge for residential customers will increase to $23.75 a month from $12 a month. The fixed facility charge is used for the electricity infrastructure, such as poles, wires, meters, equipment, and other items needed for the grid.

The variable electricity charge will now be the same for all residential customers. When Cloverland purchased Edison Sault Electric in 2010, it retained two categories of residential energy customers, called “Legacy Edison Sault Electric” and “Legacy Cloverland Electric.” With this rate structure change, all residential customers will pay the same energy cost for usage at 9.149¢ per kilowatt-hour.

For those who previously had Edison Sault Electric, the variable energy charge will increase 0.042¢, from 9.191¢ per kilowatt-hour.

For Legacy Cloverland customers, the energy charge will decrease 11.369¢ a kilowatt-hour, from 20.518¢.

The changes for small commercial customers will include facility charges of $25.60 a month for single-phase power and $40.60 a month for three-phase power. The energy usage fee will be 9.575¢ per kilowatt-hour.

For large power consumers, the facility charge will be $110 a month, and the energy usage fee will be 7.696¢ per kilowatt-hour. Large consumers also have a proportional demand charge, which will be $8.80, up from $8.03.

For Cloverland’s large industrial customers like mining companies, the facility charge will be $265 a month, the energy usage fee will be 6.314¢ per kilowatt-hour, and the demand charge will be $15.

The Cloverland board also changed the rates for yard lights.

The board unanimously adopted a new list of additional service charges, including reconnecting fees, disconnecting fees, bad checks, late payments, and other services. Included is a new $1,000 fine for illegally tapping into the electric grid, which will be charged in addition to the amount of electricity stolen, Cloverland CEO Dan Dasho said.

The new rates will be used beginning January 1.

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