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Officials with Willmar Municipal Utilities may consider increasing city's water rates

WILLMAR -- The Willmar Municipal Utilities Commission is looking at the possibility of increasing water rates.

The commission on Tuesday received a timeline from General Manager Bruce Gomm leading to implementing new rates on Jan. 1, 2011.

Gomm said he has mentioned from time to time over the past two years that the water division's financial position has been declining.

Although the division has held the line on operating expenses in 2009 and 2010, corresponding revenues have continued to fall even further, forcing a need for a rate adjustment in 2011 in order to maintain reliable, quality water service to customer-owners into the future, he said.

Gomm said he was recommending a rate adjustment, drawing on his staff's analysis of the department's current position, future needs and a review of the most recent water cost-of-service analysis and rate study by consultant Burns and McDonnell.

Gomm said he talked with city officials to coordinate a timeline for the rate approval process. Under the timeline, the commission would vote at the Oct. 25 meeting to schedule a public hearing for Nov. 8 to take comments and vote on the rates.

Utility officials would explain the proposal to the City Council's Finance Committee on Nov. 8. The council would introduce an ordinance for enacting the rates on Nov. 15, conduct a public hearing and act on the ordinance at the Dec. 6 meeting. If the ordinance is adopted, the new rates would be effective the first of next year.

In other business, the commission voted 3-2 to end participation in the Power Coalition Group. The group originally consisted of six utilities including Willmar that proposed to combine their future power supply needs in an effort to reduce energy costs.

Willmar joined the group to find power supply options for replacing the 30 megawatts of power the utility buys from Great River Energy under a contract that expires in 2015.

The number of group members was reduced to five, however, after Nashwauk Utilities withdrew because a large potential customer would not provide firm energy requirements.

With that membership change, the future of the group was unknown. The group had completed an initial power supply study and wanted to proceed with the second phase, which would cost Willmar up to $30,000.

The second phase would have resulted in the group obtaining prices from various energy suppliers. Group members felt they could obtain better prices by combining their individual loads into one larger block of power, rather than each utility trying to obtain prices on their own.

The commission at first voted to join the study, then tabled participation at the Sept. 27 meeting. Gomm placed consideration of the study on Tuesday's agenda. He recommended the commission proceed but said the decision was the commission's to make. Among other reasons, Gomm said Willmar could not come close to getting the same level of information acting alone.

The commissioners discussed the recommendation at length. A motion to proceed with the study at a cost not to exceed $35,000 died for lack of a second.

Another motion -- to abandon participation in the group -- was approved 3-2 to with commission president Doug Lindblad and members Dave Baker and Marv Kray voting in favor and members Jerry Gesch and Gary Myhre voting against. Commissioner Steve Salzer was absent and commissioner Matt Schrupp left the meeting before the vote was taken.

Lindblad said the biggest reason for voting against was the uncertainty of what Willmar would end up with after spending the money to participate in the study because each of the five members would end up negotiating individually with power suppliers.

Gesch said he wanted to support Gomm who recommended proceeding with the study.

"I believe there was a possibility that this would help in our further (power supply) negotiations,'' Gesch said.

Gomm said after the meeting that he recommended the study because he felt that it that would offer the utility potential options.

"Of course, that comes with a cost,'' he said. "I felt that the ability to spread that cost over several participants would make our costs overall less, and that's why I recommended to proceed. But now that the commission has decided not to, then I just hope that we'll be able to address those same concerns as economically as possible.''

David Little
David Little covers the Willmar City Council, Willmar Municipal Utilities and other city news.
(320) 235-1150