Traverse City utility hikes rates

Traverse City Light and Power will raise electricity rates 5% beginning in October.

The board of the utility, which also operates a broadband provider that is running significantly over its budget, announced plans for a $40 million new facility and approved the rate increase at its Sept. 8 meeting. The rate hike will include the following average increases per month:

• $3.74 for low-use residential customers
• $5.60 for medium-use customers
• $10.10 for high-use customers
• $12.86 for commercial customers
• $728.09 for industrial customers

Karla Myers-Beman, chief financial officer at Traverse City Light and Power, said May 11 that rates would have to increase for several reasons, including “the decommissioning of coal plants, surging electricity demand from data centers, and an accelerating transition to new energy resources,” as reported by 9and10 News.

There are no significant data centers in the Traverse City area, Ted Bolema, a fellow at the Mackinac Center for Public Policy, wrote in a June 15 blog post. City officials, he wrote, underestimated the cost of deploying a broadband service and overestimated demand for the service in a market that is already amply served by private providers.

The broadband project, initially budgeted at $4.2 million, increased in cost to $28.2 million by 2023, as Michigan Capitol Confidential reported.

In 2020 the board of Traverse City Light and Power transferred $3.5 million from its electric fund to its broadband fund, structured as a 10-year, zero-interest loan. A balance of $3,264,230 remains on that loan.

The city-owned utility also announced plans to build a $40 million campus, according to the Traverse City Ticker.

An ad hoc committee will oversee the project. A new financial strategy, according to a document presented at a December 2025 board meeting, was scheduled to begin in August 2026.

What Traverse City Light and Power describes as a “Sustainable Innovation Campus” is needed to accommodate employees, help the broadband project expand, improve building efficiency and sustainability, improve employee collaboration, and enable the utility to expand its services, according to a document the board released to potential bidders.

The new facility will be serviced by ground- and rooftop-based solar energy, as well as geothermal energy. It may also include wind power equipment and a nano-grid/microgrid.

A capital improvement plan reported that the new campus will cost $40.6 million and that work on it will begin in 2027.

Myers-Beman points out that rising costs due to increasing demand from data centers and other technology-related uses are not problems unique to Traverse City or the utility.

“Data center growth was not the core basis for TCLP’s rate adjustment, nor is the adjustment associated with serving a specific prospective data center customer,” Myers-Beman told CapCon in an email. The new campus will include natural and community-oriented spaces.

The rate increase, she added, is not funding construction of the Sustainable Innovation Campus.

“Maintaining adequate operating income and financial strength, however, is essential to TCLP’s ability to reliably serve customers today and in the future,” Myers-Beman wrote. She noted that the scope, timing, cost, and financing strategy of the project, including whether or how to take on debt, have not been finalized.