WILLMAR -- Proposed new rates for each of the electric, water and district heating divisions were approved Monday by Willmar Municipal Utilities Commission.
City Council approval is required to put the new rates into effect.
Under a calendar schedule proposed by the commission, the new rates would take effect on April 1 after the commission holds a hearing on Feb. 12 and the council holds a hearing on March 5 to take comments from the public about the proposed increases.
The council must approve an ordinance to enact new rates for each of the divisions.
Mike Nitchals, utilities general manager, said the utility has been reviewing its costs. Because energy costs are increasing, the utility authorized rate studies for each division. He said the studies indicated the utility has cost-based reasons to adjust the rates.
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Electric rates would increase 5.8 percent overall. The last electric increase was approved in 2003.
Nitchals believes electric customers will not be paying the energy acquisition adjustment after the new electric rates go into effect. The energy acquisition adjustment lets the utility pass certain power supply cost increases on to customers.
The utility has charged the adjustment during four of the last 12 months and expects the adjustment will be charged from January through March of this year, he said.
"When the rate schedules go into effect, we're virtually certain there will be no energy acquisition adjustment for quite some time after that, so it will revert to paying just based on the rates rather than paying these extra costs,'' he said.
Water rates would increase 8.5 percent overall. The last water increase was approved in 1999.
Some customers' water bills may go up more than the overall increase because the new rates will be flat rather than decline as consumption increases. The change reflects the state's goal of promoting water conservation.
Nitchals calls the new water rate schedule a fairly radical redesign.
"One key cornerstone is not having declining block rates that might in a way encourage more consumption,'' Nitchals said. "The new rates will have flat rates within each rate class so that no customer will receive an economic benefit by using more water. That's the goal with the new design.''
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The district heating rates will increase 20 percent overall in a two-part adjustment. The last district heating increase was approved in 1989.
In other business, the commission approved an agreement with Mycoff and Associates of Conifer, Colo., to recruit a new general manager to replace Nitchals, who plans to retire.
The commission agreed to hire the search firm after Steven Thompson, operations manager for Central Minnesota Municipal Power Agency, turned down an offer earlier this month to head Willmar utilities.
Commission member Marv Kray said Mycoff was selected from proposals submitted by five recruiting companies. Kray said Mycoff specializes in utilities.
The company's fee will be 35 percent of the general manager's salary.
He said Mycoff will provide three to four candidates for the commission to interview.
In other business, the commission received the annual reports on safety, reliability performance, miles of electrical and transmission lines, and service quality performance.
