The PSCR, or power supply cost recovery, is a rate mechanism that allows a utility to pass the actual costs paid for wholesale power and fuel to consumer members. Essentially, it is a tool for keeping your cooperative on budget. We have only used this tool once since the 2018 rate increase, and it was to give back money when power costs were lower than anticipated in 2019.
Nearly 70 cents of every dollar expensed at Cherryland is spent on wholesale power costs. This leaves us only 30 cents to do everyday things like buy materials, meet payroll, and maintain our electric system. This tight margin could be drastically affected if we are off the mark in our wholesale power budgeting process.
Up to April 2018, Cherryland used a PSCR charge via a separate line item on your bill. When rates were changed in 2018, wholesale rates were stable and predicted to be stable into the future. So, we dropped the separate line item from your bill, and we have enjoyed more than 3.5 years of stable wholesale power costs.
Well, as you can imagine, times change. Stable times slowly transition to times of more volatility and hard-to predict costs. Transmission costs have gone up more than anticipated in 2021 due to increased investments in these lines that are necessary to carry power long distances. Transmission costs are $10 million over budget at our power supplier, and Cherryland’s share has caused us to not collect enough revenue from your monthly bill.
A resilient regional grid is necessary to transport energy across state boundaries and throughout the 15-state region that interconnects us to generation inside and outside of Michigan. Transmission companies are keeping up their part of the bargain by making the investments necessary to keep power flowing. These investments have increased our transmission costs by 15% this year.
Utilities are not building generation in our region either. Wolverine Power Cooperative’s Alpine facility, powered by natural gas, was put into operation five years ago. Nothing of significance has been built in the upper half of lower Michigan since that time. This means a higher reliance on transmission lines to carry the needed power from farther away. This comes at a price.
While we recognize that this is a significant event, the increased charge will be a relatively small amount. The increase will be $0.008 per kilowatt-hour. For an average member using 750 kWh per month, his/her bill will be increased by approximately $6. Power cost volatility moving forward will be the deciding factor on any future changes to this charge.
I wish I had better news, but I remain hopeful that our member-owners will remember the long period of time in which we didn’t need this balancing mechanism. I also wish I knew how long it might remain on your bill during this return of an “old friend.”
As we have always done, your cooperative employees will make every effort to be fiscally responsible. We know full well the importance of affordability to our members. We will appreciate your patience and understanding as we make this small adjustment that allows us to continue to provide the service that you all deserve and expect.
To see the most current PSCR rate click here.
Sleepy Joe strikes again…
BTO’s “You Ain’t Seen Nothin’ Yet” comes to mind as Sleepy Joe’s handlers’ tentacles seep deeper into the economy. The consequences of worshipping at the altar of the false god “green energy” have just begun.
Ask the child laborers at the cadmium mines in Africa how “clean” they feel…..
This is understandable and not surprising in the slightest – even worse than not building new and maintaining existing, the existing power generation that feeds those transmission lines is being shut down (I think the Illinois nuclear plants are still slated for closure soon?).
Given the trade-off between paying to build and maintain transmission lines, and building generation, when does it make sense to build our own power production locally?
We do have large natural gas lines that run through the area. Would they be sufficient to supply a gas-fired power plant? Would that make sense for the local power grid?
Would solar or wind make more sense? Natgas commodity prices are also up this year, and always fluctuate, while both wind and solar are getting pretty economical now — especially given the minimal maintenance needs for solar once installed — and, if nothing else, are generally more predictable in terms of annual costs. On top of that, domestic solar panel production is at our doorstep, in Ohio (using some materials and workers from Michigan), and the time is probably right to lobby for federal support to build the power production we need.
Given the increasing frequency and intensity of wind storms we’ve had across the state, every mile of long distance transmission seems like it’s gonna take increasing maintenance costs. How do you think about potentially increasing weather-driven maintenance costs when it comes to producing locally vs transporting power in?
Our wholesale provider, Wolverine Power Cooperative, did build 400 MW of natural gas generation near Gaylord about 5 years ago. The facility is producing energy and being called upon on a regular basis by the regional grid operator. The Gaylord location was chosen because it had access to multiple gas lines that we don’t have in the TC area. Currently, Wolverine is exploring large scale solar opportunities in Michigan to compliment the large amount of wind generation already under contract. What makes the most sense is a balance of all forms of generation. This has been true in the past and will continue to be true into the future. As forms of generation get shut down, Wolverine will continue to focus on this balance while maintaining a portfolio that will soon be near 70% carbon free. We do have a lot of generation in Michigan already. The problem lies in the future as more coal and nuclear is shut down. Building new generation in Michigan is the problem that requires a robust transmission grid. There is opposition to coal, nuclear, wind and some growing resistance to large scale solar within Michigan’s boundaries. While you are correct in the assumption that local generation might be better than transmission, local generation is not a realistic possibility that can be counted on. I’m not saying that it won’t or can’t happen. All I am saying that whenever anything is built anywhere, there is opposition that attempts to stop the project. Thus, we need to keep all options open. All options will include transmission and it’s associated maintenance costs.
Thanks for the detailed answers.
“near 70% carbon free”. That’s honestly a really incredible figure. That puts our power generation mix in the same ballpark as wind-turbine-exporting Denmark, and we’re definitely paying a lot less per kwh than they are (and in fact less than much of the USA is). Northern Michigan #1 🙂
I’ve definitely seen first-hand how uninformed NIMBY’ism remains a very powerful negative force against even small improvements. Fresh in my mind: opposition to offshore wind farms on the Atlantic coast in New Jersey, from people that claim it’ll destroy ocean views, even though the wind farm is 15 miles off shore, so literally over the horizon, and therefore pretty invisible. I remember the same thing happened in Michigan about a decade ago.
Personally, I am really negative towards coal (until somebody convinces me its still got merit in 2021). During the coal power lifecycle, it emits more radioactive waste than actual nuclear power production, pollutes the air with particulates that cause breathing issues, and pollutes water and land where it’s mined with other heavy metals and isotopes (that’s mostly a West Virginia problem, not something we directly get hurt by here). There are only a couple demonstrator “clean coal” plants in the whole USA, and those have mostly been failures (they decreased NOX / smog, but increased other forms of pollution: https://www.reuters.com/investigates/special-report/usa-coal-pollution/). Again I’ll keep an open mind if somebody shows me data to the contrary, but it feels like coal power only belongs in history books about the dawn of the industrial age. Of course, we can’t shut them off right away, because we still need to keep the lights and refrigerator running on, but that just makes it all the more important to look at all the other sources, ASAP.
In my perfect world, we’d be building modern-design nuclear plants for base load, smaller local gas power plants to minimize the need to find land for and build transmission, and arranging financing deals to put solar panels in a coordinated way on places like big box stores like Meijer / Costco, as sun shields in massive parking lots (places like the literally miles of concrete surrounding the TC mall), and spaces like the landing approach paths to the TVC airport (which are required to be clear of structures and trees and can’t be used for anything else anyway, and seem perfect for solar).
I know most of the places I just named aren’t even Cherryland’s territory, and all this takes money, time, and (the hard part) community and political agreement, but again, I’m just dreaming of a perfect world, and hey, maybe there are deals to be done on a regional basis.
We can definitely agree on nuclear energy and small local gas plants. After that, it’s math. We need X amount of energy to run the grid. When all sources except coal fall short of the X number. Coal will be the source that keeps the lights on. The key will be getting the other sources in large enough quantities at all hours of the day – then, and only then – we can shut coal off. This doesn’t mean I’m anti climate or “king coal”. It simply means we have a math problem caused by the lack of building generation, locally or regionally. Environmentalists and utilities share the blame.
Certainly not why I need to hear. Not much I can do about it……..need electricity to heat my house…….guess it’s another layer of clothes
6$ a month for average consumer
Six dollars a month seems more than reasonable, particularly as it’s the first increase in the past several years. And the more renewable sources that the cooperative can use, the better it will be for our warming planet, in my opinion. Thank you.
Thanks for the update, Tony. This will be a blip relative to what will happen in regards to what we pay for propane. I’ll definitely be using more electric heat this winter.
Tony, sorry to hear we needed to take this step. With increasing demand at peak times, loss of generation capacity, more long distance transmission, compounded by wacky weather fueled by climate change, it’s hard to imagine that wholesale market volatility will settle down any time soon. At what point will the (temporary) PSCR become a permanent rate increase?
Also, the supply contract between Cherryland and Wolverine agreement seems a bit of a mystery. I thought that we had a fixed cost agreement with Wolverine, that would shield Cherryland members from market volatility. Is there some kind of a claw-back arrangement where that is not the case? Or is Cherryland paying now for Wolverine’s shortfall last year?
Related, I’ve been told a number of times that, for example on the topic of time-of-use rates, that it won’t work for Cherryland because we’ve a fixed cost agreement with Wolverine. If we Cherryland members get more savvy, and use more energy off-peak and less energy on-peak, would savings on wholesale costs come back to us as a negative adjustment to PSCR? If so, then time-of-use really does matter, and potentially represents a huge source of savings.
Thanks again to you and everybody there for all your hard work.
I can’t tell you when or if the PSCR will become a permanent rate increase. When we raised rates in 2018, we essentially rolled in this mechanism and removed it from the monthly bills. This lasted 3.5 years. In hindsight, I would not do that again. I would leave it on the bill and let it go negative or zero for months at a time. It is a great balancing mechanism for good times and bad times.
We have never had a fixed cost agreement with Wolverine. What we have is an all requirements contract wherein we purchase 100% of our needs from Wolverine. Wolverine has done a great job over the years of keeping rates stable. This may have made it look like we had a fixed price. This increase is truly as explained – the passing on of increased transmission costs.
TOU rates is a tough one that is currently under analysis at Cherryland and has been for several months. The Wolverine peak is typically 5 pm to 7 pm. The average Cherryland member is coming home at that time. We are studying the cost/benefit of moving kilowatt hours off this peak. I’m not convinced there is enough to move that would generate a “huge source of savings”. We are working on it. Savings on wholesale power would definitely come back to members as a negative PSCR. We have had negative PSCR amounts in years past. Our co-op model is built around keeping margins/profits to a minimum.
$6.00 times 36,ooo members is a big increase.
It’s all bull crap who got the raises ?
You have more houses built then in how many years and you are raising rates
Cherryland has always been a rip off compared to consumers energy
My electric bill for years compared to the same house on consumers was almost 40 more a month
I respectfully disagree. The new homes in our area have helped keep rates down. They are a big reason there has not been a general rate increase since 2018. This PSCR charge is directly related to increased transmission costs on the regional grid. I do regular analysis of residential bills from Consumers Energy customers. Cherryland is consistently 10% to 20% cheaper. I would respectfully ask you to send me a copy of both bills you are referencing.
I will do that tony
So why raising rates when I the last year and continuing to grow with new homes?
Answers who got the raises?
I have been able same property for over 35 years
Had wood stove for years
4 person family
Then went to just two
Natural gas furnace
My bill never lower the 140
Same family down the road
No natural gas for furnace
110 on consumers
Please do t tell me cherryland is cheaper
Gave how much money back last year finally to your customers now let’s raise the rates
You only did that because families were hurting during Covid
Now taking it all back ????????????????????
Again, the column explains why the PSCR is needed. I will have somebody look into your usage. Every home is different. There is a lot of analysis that can be done through the daily meter readings. Cherryland is cheaper than Consumers Energy, even more so with their new time of use rate. Cherryland has given over $30 million dollars back to our members since 2008. We annually give money back. Last year, we did give more back due to Covid. We are not profit motivated and so no reason to hoard extra dollars earned in 2020 due to people staying home. This charge will be no different – if budget estimates change, it will go lower or negative.
Hi Toney. dave the lineman you do not believe. My Uncle brought electricity to Summit City in the late 1930ies under the Rural Electrification Act. I have been to Europe and Central America in the last three years. I Guess I should entitle you to at least as many mistakes as I make. Not believing me, I think was a mistake. Electric cars and new batteries do not add to the power load. The 5PM to 7PM high load problem is not caused by battery cars and trucks and connected or not connected to home individual lithium battery storage. Battery storage in ‘autos / with or with out throw over installed systems in homes’, farms, business and industry is the future. It is also a big part of the solution. You know longer have to believe me; it has become a fact and very beneficial aspect of power-generation in countries with as many problems in generating energy as we have here in good old Michigan; yet they continue to ‘shut down nuclear power and natural gas plants’ in those countries. Toney I applaud your diligent effort to Cherryland but it is time to broaden your options. New battery storage products provides the leveling of the energy load you struggling with. The Arizona Public Service provides 50% of the utilities night time load requirements with Solar capacitor arrays not to mention the power factor attributes. I know we in Michigan do not have the Solar benefits that the suns position provides to Arizona. But we have a little greater wind advantage than Arizona much more Geo-Thermo, heat and cold transfer than Arizona. Not to mention the worlds new technology capital created by the new energy growth tech. provided by the auto industry. The Most important factor being the ‘reliability of energy’! Yes more work for are 30% cost factor lineman installing circuit regulation equipment But the nearly indestructibility individual customer constant power supply Is a benefit every customer desires. Oh yes those new electric cars and trucks provide power to the grid at night. There is no charge, zero cost to plug in to battery chargers at work or shopping centers in Europe and Central America. Solar and wind provide the energy during the day light hours for those cars and trucks and those cars and trucks provide extra grid power at night plugged in to the grid. Geo Thermo is the most cost saving electrical invention in the last 30 years. The affect to for profit utilities is the only thing holding the US from overtaking the world in clean energy savings. 30 years ago I convinced Detroit Edison to create a Geo-Thermo program for distribution customers. Heating and cooling. Detroit Edison shut down the program in 4 months. with a budget of 6 million dollars not yet used. Every residential customers bill in the program went down by 45 to 65 percent. Something you of all people should understand! I gave my time and efforts installing individual home wind generation on a volunteer basis for the U of M engineering Proff that ran the EPA in Ann Arbor for years. installing his innovations all over South East Michigan. ‘My 3100 sq foot, 25-year-old home’ in Benzie Co. has R-35 walls with geo-Thermo floors. No air conditioning needed. Tony the future is there in the past. Look for it. I am sure you will find it. Good job on your comments to our fellow customers.