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Willmar council OKs increase in water rates

Shelby Lindrud / Tribune The Willmar City Council approved raising 2018 water rates charged by Willmar Municipal Utilities. No change in electric rates is planned, but a new franchise fee will be charged.

WILLMAR — Utilities customers in Willmar will see an increase in their monthly bills in 2018 as the Willmar City Council approved raising the water rate and implementing the new city franchise fee.

The council voted 6 to 0, following a public hearing Monday night, to amend the city ordinance that lays out the rates charged by Willmar Municipal Utilities. Councilors Ron Christianson and Audrey Nelsen were absent.

Water rates will increase 5 percent in 2018 and in 2019 for all customers. Even with this rate increase, Willmar continues to have low water rates in comparison to other cities.

"We are near the lowest rates in the state," said John Harren, utilities general manager.

Electric rates will stay the same. However, a new city franchise fee will be charged to each customer.

"In the past the city franchise fee was incorporated within the rates," Harren said. Now the fee will be collected separately from the rates.

This fee will be used to fund the annual intergovernmental transfer between the utilities and the city, along with costs the utilities occur to oversee the city's street lights. Harren said all together that totals about $3 million a year.

The fee amount to be charged to each customer will be determined by multiplying the customer's monthly energy use by the franchise fee rate. The rate will be calculated at the beginning of each year and stay the same for the entire year. The formula will take the total amount of electricity sold by the utilities and divide it by the intergovernmental transfer fee (or payment in lieu of taxes) and the city street lighting. This number will then be used to calculate the customer's monthly franchise fee.

The franchise fee rate for 2018 is yet to be determined. Each year the rate will be recalculated. The rate could change depending on the amount of power the utilities sells or how much the utilities has to pay the city for the intergovernmental transfer fee and city street lighting.

Mayor Marv Calvin said he approves of the idea to charge the city franchise fee as a separate item to provide greater government transparency.

"So the consumers, who are using those energy sources, really know where their costs are going," Calvin said.

This is the first time since 2015 that utilities rates have increased, despite a 2014 rate study that called for increases every year.

"There weren't the increases the rate study said we should have done. That is why we have to look at this increase now, through the intergovernmental transfer," Calvin said.

Harren said with the upcoming decommissioning of the district heat program, Willmar Municipal Utilities now has even more options for the future, including whether to continue producing power at the plant or purchase all the city's power needs through contracts. He said the Municipal Utilities Commission's goal is to manage, hold or even reduce the rates charged to customers going into the future.

"We are trying to position ourselves to stay very competitive," Harren said.