News Release

For Release July 18, 2006                                                                

Contact:  Jim Cooper, Key Accounts & Marketing Mgr., Traverse City Light & Power

               Phone: (231) 932-4560 or E-mail: jcooper@tclp.org

Contact:  Phil Callighan, Sr. Account Executive, Knorr Marketing

   Phone: (231) 947-9707, ext. 207; Mobile: (231) 342-7590

               or E-mail: philc@knorrmarketing.com

L&P Announces Public Hearing July 25 on Proposed Rate Adjustment

Consultant Proposes 2.5% Overall Rate Increase

(Traverse City, Michigan) — The Traverse City Light & Power Board of Directors will consider an overall 2.5% rate increase in 2007, as proposed by a consultant they had hired to evaluate the utility’s revenue requirements through 2011. A public hearing to discuss the proposal is scheduled for the next regular meeting of the L&P Board on Tuesday, July 25 beginning at 5:15 p.m. The meeting will take place in the City Commission Chambers on the second floor of Traverse City’s Governmental Center at 400 Boardman Avenue.

            In Traverse City, the average home, using 515 kW of electricity each month, could see their bill increase $1.15 (including tax) per month, if the 2.5% rate increase was adopted.

            “Our consideration of the proposal doesn’t mean we will automatically adopt it,” said Linda Johnson, Chairman of the Light and Power Board. “However, the consultant we used to determine our revenue requirements has presented several compelling reasons to do so.”

Mark Beauchamp, a consultant from Utility Financial Solutions in Holland, Michigan, has recommended the L&P board increase overall rates by 2.5% in 2007 as part of a rate track he proposes to accommodate the uncertainty in power supply costs

and increase the utility’s cash reserves. He cited increases in transmission charges, volatility in the natural gas and coal markets, the need for new generation resources and volatility in the market prices of electricity as reasons to increase the utility’s rates.

According to Beauchamp, while L&P is currently in good financial standing, the utility needs to increase its cash reserves significantly, in order to ensure the timely replacement of the utility’s power lines and transmission assets, while continuing to fund capital improvements and operating expenses.

Utility Financial Solutions specializes in cost-of-service and financial planning for electric, water, and wastewater utilities and is recognized as a national expert in the field.  The president of the firm, Mark Beauchamp, has completed electric rate studies for utilities in 20 states.

Traverse City Light & Power (www.tclp.org) is a community-owned, community- focused municipal utility that offers energy at low rates in the region to over 10,000 customers in Traverse City, and parts of Blair, East Bay, Elmwood, Garfield, Peninsula and Paradise townships. 

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