TCLP Rate Hike Looms

A public hearing is set for September 8 on a proposed 5 percent rate hike this fall for customers of Traverse City Light and Power.

The TCLP board scheduled the hearing at its monthly meeting last week. Utility officials said the rate increase is needed to help maintain the electric system’s reliability, pay for expanding customer education and outreach programs, and keep up with the escalating costs of infrastructure upgrades.

“We need to ensure we have the financial capacity to reach TCLP’s strategic priorities,” utility Chief Financial Officer Karla Myers-Beman told the board. “We also need to prepare for future needs.”

The rate increase, which if approved would begin with the October billings, would be the fourth rate increase for utility customers over the past six years. TCLP approved 2.5 percent rate increases in the 2021-22 and 2022-23 budget years. There was no change in 2023-24, but a 5 percent rate hike in 2024-25. Officials said those increases were based on data from the utility’s “cost of service” study last done in 2022. Another cost of service study is planned in the 2027-28 budget year.

There were no rate increases last year. But in December the utility shift to a “time of use” rate schedule that charges varying rates for residential and commercial customers based on when electricity is used and the time of the year, with lower rates during “off-peak” hours evenings and nights, with higher rates during peak demand periods during the day.

Under the proposed rate schedule, those time of use rates for residential customers would range from a low of around 7 cents per kilowatt hour (kWh) during non-peak periods in winter months, to a high of more than 27 cents per kWh during peak use summer months.

Cost estimates generated by utility staff showed that low-consumption households will pay around $3.74 per month with the rate increase, with mid-consumption residents paying another $5.60 per month and high-consumption homes another $10.10 per month.

Revenue from residential customers is expected to increase by more than $470,000 annually with the higher rates, officials estimate. Commercial revenues will increase by more than $1 million per year.

Commercial customers will pay almost $13 a month more, officials estimate, while industrial rates will increase by just over $728 per month.

Also going up is the monthly facilities charge collected by the utility, which represents the fixed costs for providing power across its service district. TCLP Executive Director Brandie Ekren said that charge is also typically reviewed when rate adjustments are made. The fee will increase to $14.55 per month, an increase of almost 7.8 percent from the current charge of $13.50 per month.

Even with the increase, TCLP officials said the utility’s rates rank in the lower quarter among utilities across the state for both residential and commercial customers.

“I think the key takeaway is that TCLP rates remain competitively positioned in relation to other utilities in the state of Michigan,” Myers-Beman says.

TCLP is also bolstering its efforts to help residents struggling to pay their electric bills. It’s working with the Salvation Army’s Traverse City chapter on a low-income assistance program based on household income and family size to help customers with their utility bills that officials said will launch this fall. It’s also rolling out a “Customer Cares” program in early 2027 to help residential customers facing financial hardships for things like medical bills, but don’t otherwise qualify for low-income assistance programs.

“We are trying to keep costs low - we are mindful of the impact on our customers,” Myer-Beman told the board. “Really our goal is rate stability, and avoiding a large (rate) adjustment in the future.”

Board members also discussed other options for generating more revenue, including recouping fees for payments made by credit card, and passing those costs on to rate payers. Ekren says previous boards decided against that in the past. Current board members said it’s an option to consider but didn’t want it to be part of the proposed rate increases, and will look at it again in the near future.