By J.M. Boggs
Chelsea residents will see an increase in their power bills when the 2019-2020 fiscal year begins.
During its June 3 meeting, the Chelsea City Council approved a base $1 increase on all meters each month with an additional 2 percent increase on kilowatt hour usage for all residential customers. Commercial and industrial customers will see a 4 percent increase in the price of a kilowatt hour of energy.
After City Manager John Hanifan introduced the rate increase measure, city council member Rick Catherman prompted him to explain why the increase was sought, based on prior discussion held during a prior work session and public hearing.
Hanifan explained that the city’s utilities enjoyed a flush period in the early 2000s with a “healthy fund balance.”
“We had very favorable purchase agreements and we didn’t really have the infrastructure needs that we’ve had in recent years,” he said. “We’ve had to deplete those [reserves] to make the substation upgrade that we’ve had in the last couple years.”
Now, officials believe an increase is needed to ensure customers aren’t hit with a larger hike down the road.
“Forgoing a small rate increase over time ends up leading to what can be called rate shock,” Hanifan said. “If you looked at the historic rates we presented, whether its water or wastewater — no so much in electric — you’ll end up having really significant, double-digit rate increases.”
He recalled on year in which an 81 percent rate increase was leveled on electric bills. “That would be catastrophic for folks.”
The city, Hanifan said, is trying to “stay ahead of the rising cost of our power supply. … Forgoing a rate increase kinds kicks the can farther down the road. We’d rather not do that.”
The city spends about $6.5 to $7 million to purchase power. Not instating an increase would leave the utility operating at a “0-based budget” for the coming year; something Hanifan said was not optimal.
“We want to make sure we maintain a reasonably healthy reserve,” he said. “When things break in the electrical system, they are expensive… So we want to make sure we have a reasonable fund balance.”
The ordinance also included additional city fees, but the only increase was for electricity.
“All of our miscellaneous fees, right down to bill printing, backyard chicken permits, dog park permits, things like that,” Hanifan said. “There aren’t any changes to any of those proposed fees.”
Following Hanifan’s presentation, the council voted unanimously to adopt the increased fee structure.