Let's Talk Rates

Published by Bob Hance on Friday, June 4, 2021 in Community

Ten years ago, we were in the difficult position of having electric rates double those of AEP, the investor-owned utility that surrounds our southwest Michigan service territory. In the rural spaces it’s not uncommon for neighbors on different sides of the road to have different utility providers, and we regularly fielded calls and complaints from our customers about the rate disparity.

The answer never set well with our customers, but the reality was not that we were out of line on the high side, but rather AEP was out of line on the low side. Going through the process of a rate increase with the Michigan Public Service Commission is a time-consuming and onerous task, and our understanding was that company representatives didn’t consider it worth the effort for the small retail customer base they have in Michigan. Just across the state line in Indiana, AEP’s rates were significantly higher and increasing regularly, but in Michigan they focused their efforts instead on the larger wholesale market.

Times have changed and AEP has since made several significant increases in their Michigan rates, to the tune that their residential rate is now 4.2 percent higher than ours, based on average usage of 1000 kWh. In fact, all the investor-owned utilities that touch our service footprint in both southwest and southeast Michigan -- including Consumers Energy, DTE Energy, and AEP – have higher rates than we do for average usage.

Why do I bring all this up? In short, because you’ll see a legal notice in this issue related to a rate increase effective with bills rendered in July. We work extremely hard to manage expenses and be good stewards of your money; as an electric customer you are an owner of this cooperative. However, we must always balance that against investing in the system to provide you with the best possible service experience from a reliability perspective.

I remind you that unlike our investor-owned utility counterparts, our goal is not to make a profit to line the pockets of shareholders. Our electric customers are essentially our shareholders. So, when we implement a rate increase, it is solely in response to our efforts to provide you with the best possible service.

July’s rate adjustment will result in an increase of $4.56 to our average residential bill of 1000 kWh, translating to a per kWh charge of 15.44 cents. This compares to 17.27 cents/kWh with Consumers Energy, 18.01 with DTE, and 16.09 with AEP.

It’s never fun to talk (or read!) about rate increases, but I’ve always encouraged our customers to look at the monthly bill from the lens of what the kilowatts provided to you. That’s hard to do after the fact, but consider the comforts, conveniences, and connections that you enjoyed as a result of your electric service and know that we will always work hard to maintain fair and appropriate rates and exceptional service.

About The Author

Bob Hance

Bob Hance is the President/CEO of Midwest Energy & Communications.