Grand Haven Board of Light and Power (GHBLP) could reduce average customer rates by 1.3% in the fiscal year 2022 (beginning July 1, 2021) according to the results of an independent rate study presented by Utility Financial Solutions (UFS) Thursday evening.
GHBLP hired UFS, a national independent utility rates consultant, to conduct a cost-of-service study to evaluate the utility’s transition away from primarily a local single-source coal-fired power supply model toward one that draws primarily from a diversified power supply portfolio with multiple sources in multiple locations. In keeping with investments in renewable energy and other regional power sources and the development of a peaking power plant on Harbor Island, UFS concluded the Board is able to reduce average customer rates by an overall 1.3% in 2022 and then hold them steady over the next 5 years.
“Through our five-year strategic plan approved in 2016, we reduced rates twice for GHBLP customers and held them constant for the rest of the planning period,” said Jack Smant, Board Chair. “We are pleased our new diversified power supply structure will allow us to reduce rates further in 2022, and again anticipate holding them steady throughout the next 5-year Strategic Plan period while continuing to enhance power supply price stability, affordability, and sustainability for our community at large.”
Most GHBLP serviced businesses will see reductions of 2.5-5% of their energy costs, and current residential average rates will stay the same. Consistent with UFS’s determined “costs-of-service” findings, the fixed components of the BLP’s rate structure are being recommended to be increased and the variable components that fluctuate with consumption will be reduced accordingly. However, the net result, on average, will equate to the 1.3% reduction UFS is recommending. Through careful capacity planning, both locally and through power purchase agreements with the Michigan Public Power Agency, GHBLP is one of few utilities planning for stable or reduced rates in 2022, while investor-owned utilities like Consumers Energy have raised residential rates by 11% in 2021 and are seeking another increase of 9% in their recent rate filings before the MPSC. GHBLP’s proposed lower rates have been determined adequate to recover the necessary redevelopment and project costs at the utility’s Harbor Island site. Without bond financing anticipated for this project, rates would likely need to increase to pay for mandatory environmental clean-up efforts on the Sims site and other capital costs that have already been completed or will remain in the five-year spending plan.
“These rates directly impact our community, and with an additional 1.3% rate reduction, GHBLP could save our community approximately $430,000 in Fiscal Year 2022,” said Gerald Witherell, vice-chairperson of the board. “That’s money that our customers can put directly into their savings, their homes, local businesses, and economy.”