What’s behind BWL’s sixth rate increase request in seven years

Lansing Board of Water and Light customer Paul Wozniak has grown weary of utility rate increases.

Since 2018, his combined electric and water bill has risen every year aside from 2021. Starting this fall, he may have to shell out an average of $10.95 more per month.

“My family of three live on a pretty tight budget on a single income. We can’t afford a $10 per month rate increase, and I know we are not the only people in the Lansing area for whom this would be beyond our means,” he said.

Wozniak recently heard about the BWL’s plan to consider a two-year rate increase. If approved by the BWL Board of Commissioners, customers would be charged 6.95% more for electric, 9.23% for water, 9.75% for steam utility and 2% for chilled water starting Oct. 1.

Another bump would come in October 2025, with rates set to rise another 6% for electric, 9.16% for water, 9.75% for steam and 1.5% for chilled water.

Citizens had an opportunity to be heard in a public hearing at BWL’s headquarters Tuesday. The board is expected to vote Aug. 27. It has the final word.

 

 The “changes are primarily intended to cover increases in operating costs,” Scott Taylor, BWL’s director of accounting, finance and planning, told City Council members last week.

Part of the reason those overhead costs are higher, Taylor said, is inflation and new state energy standards that require utility companies to reach a 50% renewable energy status by 2030. The BWL has invested $260 million toward the latter effort and is currently at 21% — with wind energy and solar power now accounting for 11% and 10% of its retail sales, respectively.

He noted that the average electricity customer, now paying about $96 per month, would see an increase of about $7 per bill, while the average water customer’s bill would go from $44 to about $48.

The proposed electric rates alone would bring in an additional $38.7 million this year and next, he said. The water rate increase would add another $10.5 million, while steam and chilled water would generate about $2.1 million.

The BWL maintains that the higher rates “will partially offset increased costs of operating and maintaining” its energy systems. But customers like Wozniak expressed fatigue after the BWL already handed down increases in five of the last six years. Electric rates went up 3% each year from 2018 through 2020, and by 2.05% in 2022 and 2023. Water rates increased by 5.5% in 2018, 7.5% in 2019 and 2020 and 9.5% in 2022 and 2023.

Another BWL customer, who asked that her name not be printed, wrote an email to City Pulse outlining her fears. She called the increases “extortion.”

“I’m a retiree with a disabled child. Trying to make ends meet is incredibly hard, and the proposed rate increase will make it so I have to cut other expenses,” she said. “I had an energy audit done this summer, and my home came out as energy efficient. I try not to run any major appliances during peak hours, but my bill still keeps increasing.”

Capital Area Friends of the Environment mounted a campaign encouraging BWL ratepayers to attend Tuesday’s public rate hearing.

The group’s president, Randy Dykhuis, has spoken against the increases because he believes the BWL hasn’t provided “any real rationale” for them.

“The Bureau of Labor Statistics says that inflation was 3% from June 2023 through June 2024. Energy prices increased even less, coming in at a 1% increase for the year,” he explained. “It’s incumbent on the BWL to demonstrate why they need these increases when inflation is low and trending downward, particularly when a significant percentage of area residents have low to moderate incomes.”

Dykhuis also isn’t sold on the idea that renewable energy standards were a primary driver of the BWL’s proposal.

“The majority of the cost for their Clean Energy Plan is going toward the natural gas RICE plant” it plans to build in Delta Township for $171 million. RICE is a type of engine with quick startup and shut-off times. BWL’s general manager, Dick Peffley, has said the engines will only be used when green sources of energy are low.

“We think they could be doing a much better job of moving towards renewables than that,” Dykhuis said.

However, Dykhuis noted that the “BWL is not evil.”

They do a lot of good things in the community. For example, when I bought an electric car, I got a $1,000 rebate from them to install a charger in my garage. I don’t think any of the other utilities do that, and I’ve also heard from solar installers that they’re one of the easiest utilities to work with,” he said.

“On the other hand, they are very opaque for a public utility,” he added. “It’s a black box, and they don’t provide very much information about what they’re doing and why.”

Not all BWL customers feel the same.

Brandon McGhan said he believes the proposed rates are consistent with the expected costs of shifting toward renewable energy sources.

“It sucks, but it’s the cost of going green,” he said. “Coal is cheaper for multiple reasons, but for BWL to get funding and stay positive in the public eye, they have to go green. Green is good, but it costs a lot, and people don’t realize that.”

Peffley said that while “eliminating fossil fuels from the repertoire of energy production” is still the goal, it may take some time to achieve because renewable energy storage technology hasn’t reached a point to where it can retain excess wind or solar power for long periods of time.

“The time will come when that goal can be achieved without sacrificing reliability or affordability in favor of sustainability, but it is not here yet,” Peffley said. “In the meantime, the BWL will continue to look out for the best interests of all customers with an eye towards new technology options and continued focus on a balanced approach to providing services.”