RATE SCHEDULE for All Cloverland Members (Rates effective with 1st billing cycle in January 2019)
|Monthly Facility Charge||$23.75|
|Monthly Energy Optimization Surcharge||$.00197||per kWh|
|Monthly Facility Charge- single phase||$25.60|
|Monthly Facility Charge- three phase||$40.60|
|Monthly Energy Optimization Surcharge||$3.37||per meter|
|Energy Charge||$.07696||per kWh|
|Monthly Facility Charge||$110.00|
|Monthly Energy Optimization Surcharge||$183.99||per meter|
Frequently Asked Questions about the new Rate Restructuring Plan
Why is Cloverland restructuring its rates?
Our objective is to implement one set of cost-based rates and increase revenue to meet our financial requirements. An expert, third-party utility consulting firm performed an in-depth cost of service study which provided the road map for our new rate design. This new rate design ultimately creates fairer and more equitable rates for all co-op members. It will enable members to reduce their energy use without reducing the revenues required by the co-op to operate efficiently and facilitate continued system improvements.
Tell me about the cost of service study.
The cost of service study (COSS) addresses rate design and the method by which your cooperative can collect the revenue it needs from each rate class so that each rate class is paying their fair share of the costs.
The study was performed by utility consultants, the Prime Group, LLC of Crestwood, Kentucky. It was initiated in 2015 and completed in 2016. The consultants examined our rate classifications and costs for providing service. This study provided us with a road map to accomplish the following objectives:
• Introduce one set of cost-based rates for the cooperative
• Allocate costs across all rate classes so that rates more fairly reflect costs to serve each rate class.
• Recover the fixed costs of providing the minimum set of equipment and services that any member needs through the monthly facility charge instead of through the energy charge.
If Cloverland is not-for-profit, why is it concerned about increasing revenues?
Our current rate structure is not covering our fixed costs. Our member-owners provide the necessary revenues that enable us to make system improvements and perform ongoing maintenance to keep our electrical system safe and reliable. It must continue to stand the test of time by not only meeting the needs of our current member-owners, but those who will rely on our services in the future.
What are the fixed costs?
The fixed costs include expenses for items such as poles, wires, transformers, line equipment, vehicles, tree trimming, property taxes, interest and maintenance. It also includes labor and administrative costs for accounting and member services.
For many years, utilities included a portion of these fixed costs in their per kilowatt-hour charge. In doing so, the revenue collected through the energy charge to cover these costs was dependent on kilowatt-hour sales which fluctuate with changes in weather, economic conditions, energy efficiency efforts, and lifestyle patterns. The co-op can better plan and manage operations when the revenue needed to provide for these costs is not dependent on kilowatt-hour sales.
What is the monthly facility charge?
This monthly facility charge is used to recover the fixed costs associated with providing service from the service point (meter) to the substation whether or not any kilowatt-hours are used. By increasing this charge, it will reduce the volatility in the cooperative’s revenue due to factors such as weather and will also reduce the volatility of our members’ energy bills. While the proposed facility charge will not completely recover these costs with this filing, it does move us in a direction toward greater financial stability. It also allows us to encourage member-consumers to use electricity more efficiently through incentive-based, energy efficiency programs.
How does Cloverland decide the amount of revenue that it takes to run the cooperative?
Our lenders and the Michigan Public Service Commission use a Times Interest Earned Ratio (TIER) formula to determine whether the cooperative is collecting enough revenue to meet its capital expenditures and interest owed. TIER is calculated by adding the co-op’s margins and interest together then taking the sum of these two numbers and dividing it by the interest.
What is the projected revenue in the rate restructuring plan for 2017?
The approved plan will generate approximately $2.27 million and be a 2.9 percent increase.
When will this new rate take effect?
Members will see this change with the first billing cycle in January 2017.
Does Cloverland offer any programs to make paying my bill easier?
Absolutely. We offer a number of options to help you better manage your electric bill. Our budget-billing program is a helpful way for you to effectively plan and balance your energy spending. Using this service, you can avoid the peaks and valleys caused by seasonal fluctuations in energy use. You can also have your energy payments automatically withdrawn each month from the account you designate. Using our auto pay service, you save money and time!
If Cloverland needs more revenue, why not just keep my capital credits instead of retiring them every year and returning them to me?
Good question and one we are often asked. Cloverland Electric is a not-for-profit electric utility. Because we are service-driven and not profit-driven, we allocate any net margins earned to the membership as capital credits. The unretired capital credits in your account represent your ownership equity in the cooperative. Over time, capital credits are retired and returned to members.
How will Cloverland’s new monthly residential facility charge compare to the current residential facility charges of other cooperatives in Michigan?
|Great Lake Energy||$32.21|
|Cloverland Electric (2017)||$23.75|
Is becoming more energy efficient and using fewer kilowatt-hours still a good thing?
Adopting more energy efficient practices in our homes and businesses is good for the environment, good for our electrical grid, and the right approach in the long run. These incentive-based programs make it easier for members to invest in more energy efficient lighting, products and systems which reduces over all energy use, and ultimately, the number of kilowatt-hours billed each month through the energy charge. By recovering our fixed costs and margins through the facility charge, we can ensure that the cooperative remains financially viable while creating a better environment for energy efficiency.
I’m on a fixed income. Where can I seek payment assistance?
There are many local agencies that provide assistance throughout the year for those in need. For more information, please call our member services department at 1-800-562-4953 or visit our website at cloverland.com.