Everybody knows there’s no such thing as a free lunch. Or free electricity.
The Traverse City Light & Power board has agreed to lift a two-year rate cap and is warning customers of another hike in 2014.
The June 2011 cap saved ratepayers about $5 million, but at a cost. The utility is expected to run an operating deficit almost $1 million higher this year because of it. L&P would have spent its entire $2.5 million capital improvement fund if the cap hadn’t been lifted.
The move will cost the average residential customer about 11 percent more beginning Oct. 1; it’s expected to generate $1.3 million by the end of June. L&P was charging residential customers less than 6 cents per kilowatt hour for electricity that cost the utility almost 8 cents.
“At some point you have to charge what it costs,” L&P executive director Tim Arends said.