Fairness and Availability

Recently I was looking at how Cherryland rates compare with other utilities in our area as that is one of the most often asked questions we get. While we do quite well when looking at higher volume users, our biggest difference then becomes the average residential user of less than 1000 kilowatt hours per month. Here the difference is quite clear. It is what we call the availability charge. It is $10 per month at Cherryland and much less at our neighboring utilities.

So, what is the availability charge? All electric utilities have certain fixed expenses associated with providing electric service. These expenses are incurred whether the member uses the electric service every day or just a few weekends per year.

For Cherryland, these expenses include:

1. on-going operation and maintenance of the electrical distribution system required to bring you electricity at the flip of a switch (hence the name, availability charge);
2. annual depreciation of these facilities;
3. principal and interest payments on the long-term debt to build the facilities originally; and
4. expenses related to customer accounting, meter reading, and billing.

The availability charge lets you, the member, know up-front part of what it costs to have electricity available at your meter each month. This fixed amount also prevents an undue financial burden from being placed on active members using regular amounts of electricity by those members who want electricity available, but may not use very much. To me, this is the fairness part of the charge because everyone is sharing the fixed costs on an equal basis.

If the availability charge were lowered, it would be necessary to increase the energy charge in order to maintain the same revenue amount. This would then shift much of the burden to those who use more kilowatt-hours. With our present system, we have tried to create a balance between different levels of electricity users. We are not asking that everyone necessarily agree with our chosen balancing methods, but we do hope that people will understand the reason it is in place.

One misconception we often get is that the availability charge is an additional charge. Please remember that it is NOT an additional charge. It is simply “A” charge that covers some of the cooperative’s fixed costs as approved by the Michigan Public Service Commission. Regrettably and probably obviously, the availability charge will not be lowered anytime soon. We do hope to control costs and operations as much as possible to keep any future increase to a minimum.

Is the $10 monthly residential charge too high? For an electric cooperative, especially one regulated in Michigan, I don’t believe it is, as the commission does a fine job of checking our numbers on your behalf. Why then is it higher than neighboring utilities? The simple answer here is density. Cherryland has 11 meters per mile while our neighbors enjoy densities much higher allowing them to spread the fixed costs through more meters per mile of line.

I realize that this will not help your pocketbook each month but sincerely hope that it helps you to understand what the charge is all about. We don’t take any charge lightly but believe it is fair while our employees do their best to make electricity available to you when you need it.