BWL belongs to Lansing
|By Mickey Hirten|
Other communities haven’t made their case for being represented on BWL’s boardEven as the citizens’ panel poking through the wreckage of the Lansing Board of Water and Light’s sorry December ice storm performance, a likely recommendation when it all ends is a call for the utility to include non-city residents on its board of commissioners.
Why would the city agree to this? If he’s feeling generous, perhaps Lansing Mayor Virg Bernero can toss communities like East Lansing or Lansing Township some sort of observer status on the utility’s board. But residents outside of the city are lucky they get their power from BWL.
First of all, electricity from BWL is cheaper than electricity from Consumers Energy, which serves most of the region. And the price difference for electricity between the two utilities widens as power usage increases.
Local politics is driving the demands for seats on the BWL board, leaving non- Lansing officials with this weak hand: “Give us seats on the board or we’ll do all we can to get our more expensive electricity from someone else.” Look forward to retirement on that campaign promise.
BWL’s problems responding to the ice storm power outages are well known. But two of the larger issues — General Manager J. Peter Lark’s vacation in New York and the inept communications plan — didn’t really affect how quickly power was restored. Electricity in my neighborhood, served by Consumers, was out for five days. In fact, now that I have a generator, give me BWL’s lower rates and I’ll chance the next ice storm.
The monthly winter bill for a BWL residential customer using 900 kilowatt hours of power is $123.58; for the Consumers customer, it’s $126.66. Granted, not a big difference. But the spread widens in the summer. Consumers bumps its unit rate to 11.9 cents after the first 600 KWH; Lansing goes to 9.9 cents after 500 KWH. If you have a big air-conditioned house, the rates make a difference.
Another gripe from customers outside of Lansing suggests that having their representatives on the BWL board will ensure attention to their interests. But their alternative, electricity from Consumers, hardly provides a customercentric roster of directors.
Overseeing CMS Energy Corp.’s operations are people like Jon E. Barfield, president and chief executive officer of LJ Holdings Investment Company LLC, a private investment company, and Kenneth L. Way, the retired chairman of Lear Corp., a supplier of automotive interior systems to the automotive industry. There is nothing wrong with these gentlemen, who no doubt serve diligently and are very well compensated for their efforts. Independent directors receive $170,005 annually for a full-year term; David W. Joos, CMS Energy chairman, also a director, gets $305,000. Customers pay for that.
Directors of publicly traded corporations like Consumers represent shareholders’ interest in dividend growth and price appreciation for their stock. BWL’s commissioners, drawn as they are from city neighborhoods and who are not compensated, are far more likely to see themselves as consumer advocates than the directors of Consumers.
Non-Lansing BWL customers have questioned the utility’s annual payments to the city ($17 million this fiscal year), suggesting that they have weakened BWL financially, which affected its ice storm performance. They also grumble that the payments help the city and its residents, not their communities. True enough.
But the payments made to Lansing essentially compensate for BWL’s tax-exempt status. Consumers pays more than $500 million a year to federal, state and local governments.
Finally, there are many legal and financial issues that prevent customers from switching utilities. State law allows some utility shopping, but businesses have taken what’s available. The system that supplies electricity to homes — wires, poles, transformers and the like — are owned by the BWL, not Consumers.
What people really want is for the light to turn on when they flip the switch. What its customers really want is for the BWL to learn from its mistakes.
(Contact Mickey Hirten at email@example.com.)