Nov 14, 2023
Meeting in a work session Tuesday, the City Council of Webster City took a long-term look at the city’s electrical and water utilities, listening to detailed reports and possible courses of action from consultants.
In general, electrical facilities will be expanded and upgraded, while further studies will be needed to determine the optimal plan for replacement of the city’s current water treatment plant, which is life-expired.
Both projects come at a time the city is building a new wastewater treatment facility with an expected cost of $79 million.
Electrical Utility
The five-year capital plan for Webster City’s city-owned electrical utility calls for spending an estimated $21.5 million, spread over several years. The largest single item in the capital budget is for the new Reisner substation in the city’s industrial park. Smaller amounts will be spent to improve transmission facilities throughout the city.
City Finance Director Dodie Wolfgram and Blair Metzger, an electrical engineer from DGR Engineering, the city’s consultant on the project, have worked for several months on an Electric Rate Study. It’s a large document with many detailed financial tables. Following are some of the most important conclusions.
Metzger noted “some cash reserves” and “some utility profits from your utility operations” could be used to help pay for the new facilities, and will help keep increases to ratepayers to a minimum. Metzger said that both the flat charge and varying energy charges for all seven classes of ratepayers were looked at, and new rates “should be set based on what it costs to serve them. The big idea is to be fair to everyone in these increases; everyone should pay their fair share with nobody subsidizing anyone else.”
The largest class of ratepayers — residential electricity customers — would likely see a 5.3% monthly increase in the total rate paid, which includes the flat and variable charges. Flat charges pay for the costs that are present regardless of the amount of electricity a customer uses, the cost of meters, and staff who provide customer service, repairs and billing.
Currently, a typical residential customer pays a flat charge of $23.70 per month, and $90.64 per month in actual electricity use charges. With the proposed 5.3% increase, the typical electricity use costs will increase to $95.43. Flat charges for residential customers will rise to $28 a month, “because that’s what it costs today to service them,” according to Metzger.
Other ratepayers would see the following monthly increases: rural residential — 7.7%; small commercial — 5.3%; large commercial — 2.1%; intermediate commercial — 2.0%; industrial — 2.1%.
Wholesale customers, of which there are only three, will see a decrease in rates of about 7.6%, as Metger noted, “they’ve been paying too much today.”
Water Utility
Readers will be aware the city is already planning to build a new wastewater treatment plant in the industrial park with a total cost currently projected at $79 million. Tuesday’s study plan was concerned with water treatment, not wastewater.
Consultants Jon Burmeister and Susanne Gerlach, both of PFM Financial Advisors LLC, Des Moines, have worked with city staff to prepare alternative scenarios for replacing or upgrading the present water treatment plant. Their report to the council showed that aging components in the plant must be replaced over the next 10 years. This will become increasingly expensive as the plant continues to age. At some point, the decision must be made to replace the plant. Technically, it is life-expired today, and could fail at any time.
A new plant would very likely use new technology. A likely candidate is reverse osmosis, a process in which water is purified by forcing it through dense fiber membranes.
Webster City’s present water treatment plant, is, in reality, a water softening facility, using lime soda ash technology. City Manager Daniel Ortiz-Hernandez cited the increasing difficulty of finding land where lime soda ash residue can be deposited, as an important factor in deciding what kind of plant the city should have in future.
The consultants presented three likely scenarios to the council for further consideration.
The first, construction of a new water treatment plant, would cost an estimated $20.75 million. The city would have to borrow funds to finance this.
Option two is to keep investing in today’s lime soda ash plant at an estimated cost of $16.3 million.
A third option would be to use a portion of local option sales taxes to fund water treatment requirements, and this is the one the council wants to study further. PFM, working with city staff, will prepare a proposal that would use proceeds from the local option sales tax, in the short term, to finance a new water treatment facility.
Regardless of the scenario selected, water users in Webster City are going to pay more for water in the future. How much rates will go up depends on how quickly a new plant is built, how it’s financed, and what other expenses are required to keep the present plant operating in the meantime.
Without knowing an exact amount, the best estimate seems to be that rates will increase at least 30% per month. For a typical 4,000-gallon-per-month residential user, this would amount to an increase of $15.37.
Summarizing the key findings of the evening, Councilman Logan Welch said: “obviously we’re facing a rate hike here; pushing it out would be reckless.”
A first reading for the new rates could come as early as the December 4 meeting of city council.
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