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More details offered on MMU rate hikes

Thursday, November 13, 2008

As reported in the Nov. 12 edition of The Marshall Democrat-News, the Marshall Municipal Utilities Board of Public Works changed a number of rates that will go into effect Jan. 1, 2009.

Rates for electricity usage were raised by 1.5 cents per kilowatt-hour (kWh), bringing rates to 11.26 cents per kWh.

Administrative Services Director Ken Gieringer said rates on the East and West Coasts are about 18 cents per kWh.

In his prepared material, Gieringer said rate increases during the past three years were not high enough to cover the costs to the utility. The previous increase, in 2008, brought electricity rates up 0.65 cents per kWh.

Even this new 1.5-cent increase, Gieringer said, "probably isn't enough, in my opinion. We knew we were going to spend more than we were going to bring in, we just didn't think it was going to be (as much as it was)."

The average customer in the 2008 fiscal year used 803 kWh per month, and for such customers, the new rate will increase their monthly electric bill by $12.04.

In 2007, MMU lost $1,190,000 on their sale of 172,000,000 kilowatts to customers, or just over 0.11 cents per kilowatt.

The electric department has lost money in each of the last three years, and the current budget projects a $2,250,000 loss without rate increases, Gieringer stated in his material.

During the past three years, approximately $3 million from MMU reserves has been used to deal with this loss.

An increase of approximately 5 percent for water services was approved along with a 15-cent increase per 1,000 gallons of water used, which, Gieringer's material states, translates to a monthly increase of $1.84 for "average" users, giving 4,800 gallons per month as an average amount.

Without an adjustment in revenue, the water department was projected to lose $500,000 in the 2009 fiscal year, according to Gieringer, which would be the fourth year the department has operated at a loss.

The board also approved an increase of $6 to the monthly base charge for wastewater service and an increase of 1 cent per 100 gallons, bringing the total to 18 cents per 100 gallons plus a base charge of $24.

The $6 charge is temporary, until problems of rainwater and groundwater making its way into the sanitary sewer system can be addressed. This "inflow and infiltration" increases the amount of water MMU must treat.

Gieringer said in his prepared material that this will mean an increase of $6.43 per month for an average 4,300-gallon wastewater consumer, or about 25 percent more than their current cost for wastewater.

Surcharges for high levels of biochemical oxygen demand and total suspended solids were set at 42 cents per pound and 33 cents per pound, respectively. This is a decrease of 4 cents for BOD and 3 cents for TSS from last year's surcharges.

"When an industry discharges wastewater that has a BOD or TSS higher than 350 (parts per million), the industry may be subject to a surcharge to cover the cost of treating the extra BOD or TSS," Gieringer stated in prepared material.

Based on numbers supplied by Gieringer, the increases to water, wastewater and electricity rates and the increased base wastewater charge appear to mean an extra income of just over $255,000 per month, or a little over $3 million per year. Gieringer said this sounded about right to him. These numbers may not be an accurate representation of MMU's increase in income, as Gieringer stated the increased base wastewater charge is a temporary one.

"I know we've got to cover our costs, but this is a terrible time to do this," said BPW Vice President Chuck Hird prior to the passing of these motions.

"If these are all passed, we need to go into a cost-cutting mode to prepare for the (hard) times everyone's (predicting)," he added.

"I think that we need, as a board utility, to be very careful of what we spend and what we buy," said BPW President Spencer Fricke. "I think we need what we need to operate, especially for safety factors. I think that when we ask for something, we (should) need that. It may mean we have to hang on to something for another year. It is going to be a matter of perception to the public. And I think we do a good job, don't get me wrong, but I think it's going to be very important at this time to do that."

All rate changes take effect Jan. 1, 2009.

A $10 fee, per utility, was put in place for those customers requesting new water or electrical service or transferring an existing account to a new one. Customers whose water or electricity gets shut off will not have to pay this fee unless enough time has passed that MMU will have to go out and check their meters.

The water department plans to construct a new water disinfection system as part of an agreement with the Environmental Protection Agency, which will deplete most of the reserves and lead to no "real improvement in production," according to Gieringer's prepared material.

This upgrade is required due to MMU's current use of chlorine in disinfecting water. At the request of the EPA, they will soon change to a substance somewhat like bleach, said Gieringer, which will be prepared on site.

The board approved the purchase of flame-resistant clothing for 20 employees from Unico for $31,000, which is expected to save $37,000 over the next four years versus the cost of continuing to rent this equipment. Lease of the equipment was predicted to cost $4,000 more over the same time period than the purchase of the equipment.

The board plans to separately purchase 11 arc flash suits and hoods, and is currently shopping around for more price quotes. The cost is currently estimated at between $6,000 and $8,000.

New electric meters -- 5,400 of them -- have arrived before expected and are currently awaiting installation. All but 200 of the city's approximately 6,000 electric meters are slated for conversion to a remote-read system.

All board members were present for the meeting.

The next BPW meeting will be Tuesday, Dec. 9, at 8:30 a.m.

See also:

Some 'larger' MMU users to see small rate hike:

www.marshallnews.com/story/1446684.html

MMU bumps up rates, gets clarification from DNR rep:

www.marshallnews.com/story/1395250.html

Contact Geoff Rands at marshallreporter@socket.net


Comments
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just the tip of the iceberg....

-- Posted by marshallite on Wed, Feb 4, 2009, at 6:29 PM

It is depressing when you have to make a choice between feeding your house or paying your electric. I certainly agree with you luckymomma we do need a choice other then which bill we are going to pay.

-- Posted by fitzgibbon on Wed, Nov 19, 2008, at 10:08 AM

This is just ridiculous! And fitzgibon.... they don't care. This town needs an additional power company..... this is just a monopoly. Plain and simple. The citizens of marshall have no other choice. And I don't know why they even act like they are voting on stuff cause you know they are not. I am a single mom and I can't afford this rate hike. With my paycheck I am barely able to afford groceries. It really makes me wanna cry. Idon't know how I will make it thru the winter. My house is all electric.....this is depressing

-- Posted by luckymomma on Tue, Nov 18, 2008, at 10:42 PM

I just would like to know what are they going to do when people aren't going to be able to pay their bills with the increase. It makes sense to me to just leave it and at least get some bills paid then to raise the price and get nothing!

-- Posted by fitzgibbon on Tue, Nov 18, 2008, at 2:55 PM

Instead of an additional six dollar charge, I propose that the MMU give coupons for six whopper juniors. I think we can all agree that this proposal would be met with some much needed holiday cheer.

-- Posted by MarshallNewsAddict on Mon, Nov 17, 2008, at 1:19 PM

worth looking in to!!

-- Posted by marshallite on Fri, Nov 14, 2008, at 10:23 PM

If they are going to justify rate increases based on rates paid on the east and west coasts, they had better also compare wages and salaries paid on the coasts as well. The proportional difference between wages and salaries paid on the coasts is much greater than the difference paid on ultily rates.

MMU needs to find ways to save money, not raise rates again.

-- Posted by Reader101 on Fri, Nov 14, 2008, at 7:35 PM

Good things these guys aren't in charge of air, huh?

So these board members finally get it about saving and cutting back..Well duh..

I got a hand it too them..Why should the utilities bite the bullett while the country and especially rural low income America is in the midst of the worst economy since the Depression?

We'd be better off having folks on the board and making decisons who can make a grocery list..

-- Posted by Hombre on Thu, Nov 13, 2008, at 4:30 PM

WOW

-- Posted by marshallite on Thu, Nov 13, 2008, at 12:42 PM


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