WILLMAR — It wasn't what anyone wanted to do, but the Willmar City Council on Monday approved the four increases for water service recommended by the Willmar Municipal Utilities Commission. The increases will be spread out over the next four years.
"The commission does not take raising rates lightly," said John Harren, Willmar Municipal Utilities general manager.
The unanimous council vote to approve the rates was taken following a public hearing during Monday's council meeting. No member of the public specifically spoke on the increasing water rates.
Starting Jan. 1, the cost of water will go up 20 percent for residential, commercial and industrial customers. Three other rate increases will follow in subsequent years. In 2021 rates will go up another 20 percent and then another 5 percent in 2022 and yet another 5 percent in 2023.
"It is high, no one is going to debate this," Harren said.
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The good news is electric rates will stay the same.
A rate study commissioned by the Municipal Utilities Commission, completed this year by Dave Berg Consulting, proposed the water rate increases due to rising expenses in the water department, as well as major capital projects on the horizon.
"The study identified a need to adjust our water rates," Harren said.
A memorandum of agreement between Willmar Municipal Utilities and the city, approved last year, increases the utilities' responsibility regarding water main costs. Willmar Municipal Utilities, starting in 2021, will be required to pay for all water main replacements, along with street repairs caused by water main breaks.
"Water main replacement should be a water cost," Harren said.
The reassigned water main responsibilities is estimated at $470,000 per year. Next year's 20 percent rate increase will raise around $600,000, helping to cover these additional costs.
"At best, the rate increase is covering costs," Harren said.
Mayor Marv Calvin said the money the city no longer has to spend on water main costs is being proposed for the city's road projects, according to his preliminary 2020 budget.
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Interim City Administrator Brian Gramentz said one of the reasons for the shift of water main costs to Willmar Municipal Utilities comes from changes in how municipalities do their financial reporting.
The next three rate adjustments in 2021, 2022 and 2023 will help fund improvements at the water treatment plants. Willmar Municipal Utilities needs to make these improvements at the plants to meet changing government regulations, as well as to continue providing Willmar with high-quality and reliable water services.
The projects are also needed to make sure Willmar has enough water for all its future needs. If a big industry moves to town, the projects will need to be done sooner rather than later. Based on city growth estimates, Willmar Municipal Utilities believes it can meet the water needs only for a few more years.
"We have enough capacity for about three years," Harren said.
Even with the growth of the city, the actual water revenue has remained flat. This is because of conservation and more efficient appliances, Harren said.
The council's action Monday also changes the formula for the energy acquisition adjustment. The energy acquisition adjustment is collected when the costs to purchase electricity are higher than the local rates can cover. The adjustment is only collected when needed, and currently Willmar Municipal Utilities is not charging customers the adjustment.
There will also be a new electric vehicle charging rate of 0.0566 per kilowatt-hour. Customers who have electric cars will be able to use electricity at this cheaper rate for their vehicles.
"Electric vehicles are on their way," Harren said.
