Area residents soon will have to pay about $8 more per month for their water and electricity, as the Lansing Board of Water and Light, or LBWL, approved rate increases Tuesday, effective March 1.
Rates will rise by 9.3 percent for electricity and 8.9 percent for water in what is one of the largest hikes in recent years. A 2.5 percent increase for all services took effect in May, and a 7 percent increase for water and electricity and 9 percent for steam occurred in March 2008.
The recent rate changes were necessary to comply with a comprehensive energy package the state passed in 2008, which required all utility providers to supply at least 10 percent of its energy from renewable sources by 2015.
Additionally, the LBWL had to find nearly $13 million at the beginning of the year — an amount that was reduced to a $5.4 million shortfall following furlough days and 10 percent budget cuts across all departments — because the economy reduced business activity and therefore utility usage, said Sandra Zerkle, chairwoman for the LBWL’s Board of Commissioners.
The March rate hikes will account for $12.3 million annually, Zerkle said.
“We have had a very bad year economically with all the companies being down,” she said.
All utility providers are aware of the state requirements, but some have been quicker to adapt than others. Consumer’s Energy, for example, is the state’s leader in providing renewable energy with 4 percent of its energy coming from such sources, said Jeff Holyfield, spokesman for Consumer’s Energy.
Consumer’s Energy employed a different financing strategy than the LBWL by charging a level rate throughout the billing process to raise funds for renewable energy capacity.
Anne Woiwode, director of the Michigan chapter of the Sierra Club, said although up-front costs for renewable energy sources can be costly, utility companies have to upgrade their equipment regularly anyway and set their budget accordingly.
Zerkle said LBWL’s Eckert and Erickson coal plants are between 50 and 70 years old and eat massive amounts of cash through maintenance and repair costs. With those plants on their death beds, she said LBWL will have to choose whether to keep updating those facilities or construct completely new ones.
Woiwode said the LBWL debated creating a coal plant for more than a year, but an 11-member public advisory panel recommended more renewable energy.
“Costs are going up, but the question is how much,” Woiwode said. “And in the long term how will that leave us as rate payers?”
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