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WIld Mountain 12-8-13

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January 26, 2022

11/12/2021 1:24:00 PM
North Branch Utility substantial revenue increase from new housing lets rate drop be considered

With revenue up by at least $200,000 for 2021 in excess of what was earlier budgeted— the North Branch Water & Light Utility Commission was able to preview a decrease in water bills for next year.   

For many years, the utility income was restricted by a depressed real  estate market.  The commission was incapable of adding customers that were supposed to be helping to pay-off investments in the system.  Debt was taken out in early 2000’s for utility upgrades and a water treatment plant. As Revenue Bonding, pay-off was predicated on a certain number of new builds generating the necessary water revenues. The full blown crash came around 2008 and housing went through a decade-long rebound and the only way to service the debt was to hike rates.

North Branch now has 95 new water accounts “in process” —plus two apartments complexes are on the horizon, one brings 72 apartments at the Falcon Avenue project, and the senior citizen housing on Cherokee Avenue, celebrates groundbreaking Nov. 17.

The plan is to drop the $7.70 per 1,000 gallons charge (after the first 1,000) to $5.70.  

For an average water consumer, the commissioners were told taking $2 off this quantity usage surcharge;  an average bill will drop an estimated $10 per month. (Calculated on a 5,000 gallon monthly bill.)

There was no discussion on changing the base monthly residential water fee of $20.

Ironically, just as North Branch is finally in a growth spurt and revenues are going up, the utility is in a “wind down” phase.

The most recent utility General Manager Scott Hautala is not running the daily business but is being paid through 2021. With no General Manager budgeted in 2022 this is a $100,000 cost savings. North Branch’s Public Works Director is now superintendent of the water workforce that merged with the city.  

There were two utility linemen who have transitioned into city Public Works as well.  The electric generating plant supervisor quit.  with East Central Electric  on contract to be providing staff as-needed.

In operations organizational materials for the commissioners, it’s been noted city Public Works Director Shawn Williams  serves as  utility manager.  There’s been no public discussion addressing a caution the commission was given around the time of the referendum in November of 2016. Public financing consultants Springsted Assoc. (now Baker Tilly) had interpreted loan documents and concluded that the Public Works Director, “...is not an experienced manager of either water or electric utilities” and thus can not be assuming this role to keep the utility in compliance with borrowing (bond) covenants.

Over on the electric side— the proposed budget calls for no change, except for commercial billing.  

Commissioners heard a three percent decrease is proposed for single phase commercial accounts,  giving “immediate relief,” for commercial accounts,  said consultant Scott Hautala. He added,  “It is not a foregone conclusion  ECE rates will be X,Y or Z. We’re all looking at (this) closely.”

Commissioner James Baxter asked if East Central Electric has signed off on this proposed bill decrease, as it’s pretty much assumed ECE is going to buyout the electric side of water and light. Chair Nathan Keech reported on a recent meeting with ECE, that left him with the impression a deal is “looking very positive.”

If this is the case, the $10 per month  future savings (projected )on the water side will be negated by ECE electric rates. According to the cooperative the base monthly electric residential rate is $30.25.  The North Branch rate now is $15.

Electric bills are hard to compare because East Central uses a different billing method to promote conservation of energy and also uses seasonal kilowatt hour rates. ECE also touts a state sales tax exemption form it can process for electric heating for Minnesota customers.  North Branch actually bills customers less per kilowatt hour the more they use.  

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WIld Mountain 12-8-13

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