By James Windell
Dawn Lund, vice-president of Utility Financial Solutions, LLC, a company that has been studying South Haven’s electric utility, gave a presentation at the regular meeting of the South Haven City Council on Monday, August 18, 2025.
In her presentation, Lund explained why she was recommending an electric utility rate increase of 4.9% to commence on October 1, 2025. “What is mainly driving the power cost adjustment is your power cost provider Michigan Public Power Agency (MPPA) projected that energy and capacity costs are going to actually increase at about 14.5%. Your 2025 actual increase was about 13%. So you’re seeing power cost increases,” Lund said.
Using PowerPoint slides, Lund talked about how the rate adjustment of 4.9% would affect the average electric utility customer. She said that based on their study she would recommend the 4.9% adjustment in 2026, but no increases in the years 2027 and 2028, however, there would be “small rate adjustments moving out into the future.” She explained that they wanted to take a conservative approach to adjustments. “We are weighing cash balances against keeping the rates as low as possible for our customers, but keeping the utility healthy,” she said.
The average customer, Lund told the Council, who would use about 550 kilowatt hours of electricity a month would see their monthly bill go up from about $82 to $87. When City Councilwoman Mary Hosley said that raising the rates would be “onerous” on people, Lund said in response that the current rates being charged may be 25 to 50 % less than customers in other cities in Michigan. Furthermore, Lund said that the fixed costs of electricity are about $17.75 per customer, yet even with the recommended increase the new rates will not come close to paying for costs “that don’t vary with usage.” These costs include customer service, administrative costs, a portion of the distribution system, and meter reading. “When you think of what the costs are and what the customer has to pay,” Lund said, “that’s a very low customer charge.” She said that South Haven has very competitive rates for this area of Michigan.
Following Lund’s presentation and her responses to questions from council members, the public hearing was opened. Only two residents made comments and neither seemed to oppose the rate increase, although one was speaking in opposition to changing the procedure for an electric rate increase from an ordinance to using a resolution process.
With the closing of the public hearing Hosley asked if the resolution process could be a two-step or two-meeting process. Councilman George Sleeper, who serves on the Board of Public Utilities, the board that previously heard the analysis presentation from Utility Financial Solutions, LLC, and approved the recommendation for the rate increase, said that using a resolution to change a utility rate is standard practice. Sleeper also commented that it is an advantage that the City Council have the flexibility to change electric utility rates – either up or down – by resolution rather than by ordinance change.
Although Hosley said she still thought the rate increase was onerous for low-end users, there was no motion introduced. Instead, Councilman Jeff Arnold moved to amend the ordinance so that future electric utility changes could be made by a resolution. That motion passed with a majority voting yes.
Then Arnold moved to adopt Resolution 2025-27, a resolution setting electric utility rates. That motion was passed by a unanimous vote. This means that the rate increase will go into effect on October 1, 2025, and that future rate increases or decreases will be decided by resolutions.
