Traverse City Light & Power is raising electricity rates by 5% at the same time its troubled municipal internet project continues to fall short of performance goals, according to a blog post published June 15, 2026, by Dr. Ted Bolema of the Mackinac Center for Public Policy. The analysis raises questions about whether captive electricity customers are being asked to subsidize an underperforming broadband operation that has cost far more than originally promised and keeps lowering its expectations.
The government-owned utility's broadband project, approved in 2019 with a projected cost of $4.2 million, had ballooned to more than $28 million by 2023—a sevenfold increase. TCL&P originally projected the fiber network would be profitable by 2021, generating $1.2 million in revenue and capturing 50% of potential customers. The project has yet to turn a profit, and the utility now projects just 40% market penetration by late fall or early winter of 2027. The Traverse City Commission approved the electricity rate increase at its May 2026 meeting, with officials citing decommissioning of coal plants, surging electricity demand from data centers, and transition to new energy resources—even though there are no significant data centers in the Traverse City region.
TCL&P Chief Financial Officer Karla Myers-Beman said the rate increase "would not fully close the utility's current operating deficit, but is part of a longer-range plan that anticipates incremental rate adjustments in future years." She projected "significant growth in its fiber internet service" going forward. The report notes that TCL&P, like most municipal internet operators, does not keep separate financial records for its internet operations. A study by Yoo and Pfenninger found that of 88 municipal governments operating both electricity and internet services, 68—or 78%—did not keep separate records.
When municipal utilities don't maintain separate books for each service, the report explains, they can more easily hide subsidies from profitable operations to unprofitable ones. Tacoma, Washington, was one local government that kept separate records and openly acknowledged shifting costs from internet operations to electricity customers. Research by the American Consumer Center for Citizen Research found this type of subsidization is quite common, with price-sensitive broadband customers subsidized at the expense of less price-sensitive electricity customers who have nowhere else to go. When loans taken out for the broadband operation must be repaid, Traverse City will likely face two options: bail out the operation with property tax funds and fees, or shift costs to captive electricity customers.
The report asks whether Traverse City electricity customers are paying for higher actual electricity costs or subsidizing an internet operation that cost more than advertised and keeps moving the goalposts. With the broadband project's massive cost overruns, persistent unprofitability, and steadily lowered expectations—combined with the lack of separate financial records—residents face rate increases without clear answers about where their money goes.