BWL electric rates would remain cheaper than DTE, Consumers, despite proposed hikes, officials say

The Lansing Board of Water & Light's proposed rate increases of 9% for electricity and more than 18% for water in the next 13 months are likely the first of several increases the utility is considering through 2027.

BWL's board is expected to vote Tuesday on the proposal to hike electric rates 4.5% and water rates more than 9% effective Nov. 1, with similar increases on Nov. 1, 2023. Customers would see the first increase in their December bills and by December 2023 a typical residential customer with both electric and water service would see their annual costs rise by $208, or more than $17 a month.

BWL Strategic Planning Manager Paul Eory said the rate proposal is overdue since planned increases were delayed because of the pandemic, and inflation because and other increased costs are impacting the city owned utility.

Sue Colegrove of Lansing, who is retired, told BWL officials during a public hearing last week that the increases would hurt people on a fixed income.

“You are asking a great deal out of our seniors,” Colegrove said.

Officials at the utility and Lansing Mayor Andy Schor's office argue that even with the increases to electric rates this year and in 2023, BWL's average residential electric rates are lower than Consumers Energy and DTE Energy.

Not covering costs

Residential electric customers' bills are not covering what it costs BWL to produce the power, according to BWL data, while commercial customers, especially small businesses, generally pay more than their power generation costs.

BWL's electricity costs are $259.6 million and the expected revenue is $254.3 million, a gap of more than $5 million. Producing electricity for residential customers costs BWL almost $87 million and brings in $81 million. By contrast, small commercial customers pay $2.9 million more than their costs, according to BWL figures.

The water side of the business brings in less revenue that electricity, an estimated $46.8 million, but the utility expects to fall short $12 million with $58.5 million in costs.

All water services provided by BWL — residential, commercial, lawn sprinkling, wholesale and fire hydrants — are underwater. Lawn sprinkling accounts racked up twice as much in cost as in revenue. Fire hydrants and fire service water almost break even, but every other type costs BWL about 20% or more to provide than the utility brings in on those accounts.

Residential customers fall more than $6.6 million short of breaking even for water costs and non-residential customers, which include most businesses, come $3 million short, according to the utility's estimates.

BWL hopes to raise electric, water rates for Lansing area customers

Eory said the utility is making efforts to blunt the increase for smaller users, including a lower rate on the first 1,500 gallons of water used. So residents who use about 1,500 gallons a month would pay an increase of around 50 cents a month.

He said water rates, if they followed inflation, would be about 33% . The last rate increase was in February 2020.

More rate increases coming?

BWL also forecast yearly rate increases for four years from 2024 to 2027. Those forecast electric rate increases (2% in 2024 and in 2025; 3.15% in 2026 and in 2027) would take a current $100 electric rate toabout $115 by the end of 2027. The water rate forecasts (continuing the 9.5% increases for 2024, 2025 and 2026 with a 2.5% increase in 2027) would take a $100 monthly water rate to about $161 by the end of 2027.

BWL commissioners are scheduled to vote on the rate hike Tuesday. Unlike Consumers and DTE, which have to seek approval from the Michigan Public Service Commission for rate increases, BWL's board will have the final say. The public utility isn't subject to the MPSC.

Semone James, chairperson of the board, said she is sensitive to the price increase, especially for people on a fixed income, and she would balance that with ensuring the utility’s longevity.

“This is important,” she told BWL leaders. “You wouldn’t come to us if it wasn’t important.”

Board members did not indicate during the public hearing how they would vote.

Colegrove said her bill, for both electric and water, comes to about $170 a month.

There are various programs for helping people who can’t afford the bills, but many of those programs are through charities or spread out payments that eventually come due, Colegrove said.

She retired more than a decade ago as a medical assistant and said increased costs all around, from groceries to gas, make absorbing an increase on water and electricity a significant burden.

“When you’re on a fixed income,” Colegrove said, “you try to stay within that budget.”

Contact Mike Ellis at mellis@lsj.com or on Twitter @MikeEllis_AIM

Comparing electric rates

BWL's average residential electric rates are, even counting the potential 2023 increase, lower than Consumers Energy and DTE rates, according to data from the Michigan Public Service Commission. The commission regulates investor-owned utilities, which does not include municipal-owned BWL. BWL staff provided to the State Journal a comparison in cents per kWh.

BWL electric costs and revenue

BWL water costs and revenue

This article originally appeared on Lansing State Journal: Proposed BWL increase is 'asking a great deal out of our seniors'