GRAND HAVEN, MICH., May 25, 2023 — The Grand Haven Board of Light & Power approved the $38 million budget for fiscal year 2024 during its regular board meeting Thursday night. David Walters, general manager, and Lynn Diffell, finance manager, provided a detailed presentation outlining the balanced budget in April and conducted a separate work session earlier this month. Power supply costs remain relatively flat for the upcoming fiscal year at $19.3 million. The five-year Capital Improvement Plan, which is largely made up of investments in the distribution and transmission systems, is projected to be $24.8 million. The approved budget shows that base electrical rates would remain stable for the year.
Vice Chairman Gerry Witherell commented, “We’ve been able to keep our revenue requirements essentially flat for an almost ten-year period. This is an impressive demonstration of the leadership team using prudent financial management principles to conduct the affairs of our electric utility.”
One of the largest factors contributing to cost stability has been the development of a diversified power supply portfolio. Dave Walters explained that while electric markets have gone up in the past two years, it is still the most economical option available for supplying power.
Lynn Diffell commented that while many other communities are struggling with unfunded liabilities due to legacy pension costs, the BLP developed and followed a financial management plan over the past seven years to properly address these commitments.
“We have been following a proactive plan with a goal to reach a 100% funding level in the defined benefit pension plan. The pension plan liabilities are now almost fully funded, which is a healthy sign of following good financial management principles,” said Diffell.
The Board approved the General Manager’s recommendation to set aside and restrict $16 million for environmental remediation on the former Sims Site located on Harbor Island. “Having the Board designate these funds as ‘restricted’ protects this money from being used for other purposes in the future,” said Walters.
Additionally, the Board also approved adding a surcharge of $0.0035/kWh to monthly bills to begin recovering increased environmental costs resulting from combustion coal residuals findings of the recently completed drilling program on the former Sims Site.
“The Board made a commitment to fund the cleanup of environmental contamination that occurred over 40 years ago when environmental regulations were much different than they are today,” said Chairman Westbrook. “We need to continue in a manner that minimizes the impact to our customers and is also transparent to all stakeholders. If the city, who is now managing the clean-up of Harbor Island in a holistic fashion, can do so in a less expensive manner or is successful in getting grant money, then any money collected from our customers, and ultimately set in these restricted accounts, will be returned to them.”
Westbrook also stated, “As the Harbor Island cleanup process unfolds, it will be important that we manage the BLP’s contributions to ensure the electric ratepayers, many of whom reside in the Townships and City of Ferrysburg, do not have to pay for expenses associated with historical contamination from the former Grand Haven City dump.”
Dave Walters commented, “While we are a publicly owned not-for-profit electric utility, we are governed by Charter to operate using best utility practices which means the revenues we collect are invested back into the transmission and distribution systems. The stability of our rates over the past seven years, the reliability improvements made to the electrical system, and the solid financial shape of the utility are the direct result of deliberate planning and execution.”
The Board, as recommended by Utility Financial Solutions, LLC, also established a minimum cash reserve level to ensure the electric utility can continue providing reliable, affordable, and sustainable power for the approximately 15,000 residential, commercials, and industrial customers in the City of Grand Haven and the surrounding area.