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November 27, 2020

10/30/2020 3:34:00 PM
North Branch Water & Light to do study on rates; chairman Smith takes on billing explanation

The North Branch Water and Light Commission agreed 4-1 last week to proceed on rate studies for water and electric.

Commissioner Mic Dahlberg pointed out,  for eight cents per customer, over the five years the study data is useful, it’s a cost-effective investment.  Commissioner Chris Bibeau was not convinced.  He asked rhetorically, “What if they (studies) tell us we have to raise the rates?”

Water and Light General Manager Scott Hautala said rate analysis helps keep the capital and operations planning on track, the data aligns finances with debt service needs and provides foundation to work off of fiscally (ie: budget projections.)

Both studies can be done for $18,000 using a quote presented, that was approved.

Commission Chair Terry Smith went over some research as it relates to North Branch utility billing.  

He explained that customers (1,735 bills on the electric side and 2,048 water bills) should understand a good portion of what consumers are charged is city billing, which the utility has no control over.  The utility acts as the statement generator but the bills are for a variety of fees, he stressed.   
The city assesses the franchise fee, stormwater fee, the city charges for wastewater (sewer) and the state’s annual lab test fee set by the legislature-- are all in there.  Nearly half the billing revenue is for debt service as well.  Assets of the utility were upgraded and expanded years ago anticipating a real estate boom, when Chisago County was among the top three counties in the nation for growth. That switched to a housing market bust of 2005 to 2008 or so.

Chairman Smith explained that changes in how the utility does billing are contemplated.

The time period between when payment is due and billing is issued needs review, and he prefers it be extended.  The billing process is spelled out in city ordinance, however, and it requires city council action to revise.

Commission members also recommend developing some form of “conservation” rate so large water consumption amounts are being paid for by those actually consuming the water and a financial incentive to reduce water use makes sense.

Residential customers should also know that if they fill a pool or hot tub they can notify the utility ahead of time. The meter reader documents the meter, and then reads it after filling for a sliding credit.  There are also strictly irrigation meters available so heavy lawn watering can be billed at a different rate; because this water doesn’t eventually find its way into the sewer plant for processing.

You also need to remember to ask for any deposit you gave the utility, to get it back after 12 months.

And, under many circumstances, the utility will gladly set up a payment structure if you need to stretch out or reduce what you normally pay.

Chair Smith said in a comparison to nine similar municipal systems North Branch water rates for an average customer showed North Branch was cheaper than two other cities’ existing 2020 rates, but rates were greater than six others.  The gap, or average local additional costs, were a concerning $180 average per year.  Electric rates though, were 11 percent lower than East Central Electric territory average residential customers. And, 100 three phase customers, according to the general manager,  do not get charged more for a service that costs the utility more.  
So, some fiscal tweaks could help spread the burden of contributing revenues.

Rates can’t be the only basis for comparing one utility to another.   Hautala said age of meters,  whether they can be read remotely, the mix of commercial to small consumer accounts and many other factors play into cost of service.  The 2021 budget was reviewed for the first time and there will be more detailed discussion at the utility commission’s November 5 work session.

The covid-19 situation, not surprisingly, has impacted the utility’s 2020 financial picture. And, the commission also anticipates presentation of a comprehensive water study completed by WSB engineering.  Hautala said the commissioners will want to have a look at this before accepting next year’s budget.

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