The Chelsea City Council unanimously approved the city’s FY 2018-19 utility rates at its regular meeting on Monday, March 19.
The changes include a $2 per month ready to serve charge for electric that has been recommended by the Michigan Public Power Agency (MPPA) as well as a 10-percent increase in commercial and industrial electrical rates.
Both of these increases will go into effect on April 1.
On July 1, a 5-percent residential electric rate increase will be implemented.
There are no planned increases for water or wastewater for FY 2018-19.
City staff provided four scenarios that give residents an idea of how these increases might impact them.
A residential apartment with two people using 4,200 kilowatts of electric per year, will see an increase of about $3.50 per month.
A home with two people who use 7,200 kilowatts per year will see an about $4.51 increase per month; while a family using electric for heat and utilizing 15,600 kilowatts per year can expect a $7.32 increase.
In a fourth scenario, four people in a home using 14,400 kilowatts per year will see a monthly increase of $6.95.
City Manager John Hanifan reminded the City Council of the necessity of the increases, which included the MPPA recommendation that there be at least three months of operating revenue available in what is an about $9 million fund.
The city has spent about $750,000 as part of state-mandated energy optimization programs, which have in turn lowered overall electrical sales and depleted operating reserve margins.
Meanwhile supply costs continue to trend upward and state mandates for energy optimization incentives continue through 2020. Plus, new energy legislation mandates renewal energy programs, and coal fired plants are retiring, which will have an impact on power supply costs in the region.
Hanifan reminded the City Council that Chelsea has among the lowest electric rates in the state at 8.1 Rev/kwh.
In addition, unlike many public agencies across the country that are top heavy on personnel and personnel costs, this is not the case in Chelsea. Currently, there are five full-time employees in the electrical department, which account for only 6.5 percent of the total budget costs. In many public agencies, that percentage is 70-80 percent, he said.
During a public hearing regarding the adjustments, no one spoke. One resident did speak about utility rates in general expressing her concerns about any increases, even incrementally, and the overall effect that these have on residents.
On Feb. 20, Hanifan presented the City Council with a detailed rate review that can be seen here on the right under videos, which are produced by Randy Lee of RK Studios.
