You’ve probably heard the saying, “When life gives you lemons, make lemonade.” Well, Cherryland has just been handed a bushel of lemons in the form of a new state energy waste reduction (EWR) mandate.
Passed in 2023, this new law goes into effect in 2026 and requires your cooperative to offer rebates for energy efficiency savings equivalent to 1.5% of our previous year’s sales.
Let me start by saying that we fully support energy efficiency. In fact, we’ve offered innovative, member-driven energy programs for decades. When done right, energy efficiency saves members money and lightens the load on the grid. But when it comes as a one-size-fits-all mandate, it hits a sour note with me. Mandates are expensive and limit our ability to adapt our programs to the unique needs of our members.
We know this from experience; we were under a similar mandate from 2008–2021. During that time, we spent about $350,000 per year on rebates and administrative costs to meet the mandate. When that mandate ended, we kept offering rebates but adapted them based on feedback from you all about what you wanted us to offer. We also saved on administrative costs.
Unfortunately, the mandate is back, the targets are higher, and we have less flexibility with what we can count toward those targets. Hitting those higher targets costs more money—both in rebates and in the behind-the-scenes work required to measure, track, and report every kilowatt-hour saved. Some of the savings are real; some aren’t. But the cost of tracking and adhering to narrowly defined rules is real.
While we absorbed those costs in our operating budget historically, that’s just no longer feasible. We are estimating that the new mandate will cost our members more than $1 million annually.
Beginning this month, you’ll notice a new line item on your bill: the EWR surcharge (it will appear on your bill as MI PA 229-2023 Compliance). This charge funds the efficiency programs the state requires us to offer.
Adding this charge to your bill provides transparency to you on the cost of this mandate. It also holds us accountable to deliver results as cost-effectively as possible. It’s designed as a flexible charge that can be decreased if our program costs come in under budget. That way, we only collect what’s necessary to meet the mandate. And you have my word that we will do everything in our power to meet the mandate in the most cost-effective way possible.
So, that’s the lemon. But, we’re not giving up on making some lemonade. Our team spent the last year evaluating how best to meet this mandate and, more importantly, how best to serve our members. They’re rolling out programs and tools designed to make sure you get real value for the surcharge you’re paying. You can read more about those opportunities here.
What is your solution to the same issue that the bill addresses? Are the administration and legislators totally wrong-headed in their approach? Do all Michigan energy providers have to comply with the mandate, or just Cherryland and/or Wolverine? Let’s keep in mind your possible $ 1,000,000 mandate related cost increase around this time next year. It is a possibility, but then fear-mongering is also a possibility.
Hi George – good questions. This mandate applies to all utilities in Michigan. However, it is very prescriptive and so what works for utilities with more industrial and commercial customers, doesn’t work quite as well for those of us with more residential customers. My preferred solution would be no mandate at all and the ability to design energy efficiency and rebate programs in partnership with our member-consumers. If we don’t meet their needs/expectations, they’ll let us know through our elections, feedback to the board, etc. But, if the State wants to have a mandate, then my recommendation is one that is infinitely more flexible and simply asks co-ops to offer programs like those without stringent tracking of kWh saved, etc.
As far as fear-mongering goes, I think it is more about candid communication about our concerns. We worked with an outside consultant (the State’s preferred contractor) to design our program to comply with the State’s rules. Their initial proposal was closer to $2 million/year. Our team did a tremendous amount of work to find creative programming ideas that have high savings value at more affordable costs and we’ll continue to do so. We’ll have a much firmer idea of how much this mandate really will cost our members after we have a year under our belt.
Let me know if you have any other questions.
Sounds like another mandate driven by the pernicious lie of CAGW. As if anything we do here in Michigan has any effect on global warming
Thank you for these informative briefings.
Would it be reasonable to estimate that PA-229 will replace PA-169 and be 1.5x higher (on a typical residential bill), or is the math much deeper than that?
Thanks.
This is such an important comment. The short answer is no. While the target is 1.5x the old mandate, the state-approved technologies that we can claim savings changed, too. For example, under the old mandate, we could claim savings for residential lighting upgrades. This was at a time when most people were converting to CFLs and then LEDs. So, we had a lot of relatively inexpensive energy efficiency upgrades that we could rebate and then get “credit” for with the state mandate. The low hanging fruit helped us meet the target (relatively) affordably before. Now the target went up and the incremental cost to get there went up, too.
Rachel:
As expected you are rising to the occasion and addressing the issue head on with transparency. Thank You!
No one likes mandates or too much Govt. involvement, but here we are.
My concern is that we do this well, as expected, then we end up with “performance punishment” and we are burdened with more mandates.
I agree! Any success we have could be used to justify higher and harder targets.
can I ask a question, Are the rates the same for residential and business?
I’m asking because if a residential home is a rental, or B& B of any kind. And the Home owner dose not live in the home six month of the year and that home generates income for the property holder that should be classified as a business and should be charged a business rate. This could be check out through each township, And anything senior citizens over 65 should get a break on there bill if they are a year round resident.
Hi Sharon – we do have commercial and residential rates. But, if someone is renting their home in a residential area, that would be under the residential rate. we really don’t have anyway of knowing if someone is generating income by renting their home because we are not a taxing entity. If the usage profile of the home is residential, it’s simply a residential service for us.
We are looking at our residential rates this year and analyzing whether there are different or better ways to assess charges. In particular, we have always one single residential rate for all 35,000 (ish) residential members. We are analyzing whether that should change and if there would be better ways to make sure we are allocating our costs, and therefore collecting revenue, in a way that is fair and avoids subsidization. Stay tuned for more on that over the next 12 months.