City joins action against electricity hike

April 18, 2010
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The last time the city of Grand Rapids spent $35,000 to join the Michigan Municipal League to oppose a rate hike that Consumers Energy filed with the Michigan Public Service Commission, it saved more than $140,000 in estimated future electricity charges just for its Lake Michigan Filtration Plant and Low Lift Station.

That was only last November, and the proposed increase then was 7.9 percent. The Michigan Municipal League represents cities and villages in the state, and at least 75 municipalities, including the city, joined that intervention, as it was called. The MPSC last month reduced Consumer Energy’s November rate request by $5 million, from $139.4 million to $134.4 million.

Last week, city commissioners agreed to spend another $35,000 to again join the MML in its opposition to another increase proposed by Consumers Energy to the MPSC in January.

The city said the hike would amount to an average of 5 percent and would total $178 million for municipal customers served by the utility. Haris Alibasic, an administrative analyst with the city, said the proposed increase could raise the cost to pump water by 8 percent and raise the charge for some street lighting services by at least 13 percent. In all, Alibasic said a hike could cost the city about $300,000 a year if the MPSC approves the Consumers Energy request.

“If we could reduce that by 2 percent, it would be substantial,” he said.

Alibasic also said if the MPSC does ratify the rate hike, the city may have to raise its charges to customers for water and sewer service. Those rates went up at the beginning of this year. Muskegon has joined the intervention and Alibasic said it was likely that Wyoming would do so shortly.

The MML is expected to spend about $150,000 from its legal defense fund to have the Clark Hill law firm represent it and the municipalities in its intervention before the MPSC. The intervention’s goals are to: contain utility increases; pursue a long-term effort to lower municipal costs in the future; continue to try to save the municipal pumping credit from being abolished; secure a separate rate structure for municipalities; and make the MPSC fully aware of how rate increases affect municipal governments.

“The city has been able to significantly reduce the impact of increased electrical costs on water and sewer rates as a result of these rate interventions,” said Alibasic.

This rate intervention will be the third for the city since November. In February, the city joined the MML in filing an order with the MPSC that cleared the way for the actual rate intervention to proceed.

“The coalition met on March 24, 2010, and there was substantial support for continuing the intervention and to secure financial commitments from other municipalities who will be affected by the rate increase,” said Alibasic. “There were over 75 participants in the coalition in the last rate case.”

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