Utility Rate Changes Move to Third Reading

The Sidney City Council met Tuesday, Jan. 14, consenting to moving proposed water and electricity rates to the third reading.

On Dec. 3, the city council was presented with a proposal to update the water and electricity rates. The proposal said water base rates were restructured about three years ago “to reflect actual user size as the basis for base rates.” Water unit rates were left unchanged when the base rate was last changed.

Electricity rates have been adjusted twice in four years; both were increases regarding new transmission cost increases.

City Manager Ed Sadler's proposal says the base rate changes for water customers addresses the fixed costs that are not related to the amount of water used.

“It has been several years since the base rates have been increased,” he said in the proposal.

The electric rates are under review from two points, according to the memo. The proposal calls for an “overall rate decrease,” and a restructuring of rates “to better reflect actual costs incurred by the utility.” Base rates are to go up to address actual fixed costs, Sadler said in his memo.

“Currently, many of those fixed costs are being funded through energy costs by having tiered rates and higher rates,” Sadler said.

He added most people are not aware electricity costs the same regardless how much is used or what time of day. He said he expects the commercial and residential rates to go down an average of 5 percent.

Vice-Mayor Joe Arterburn disagreed with the council moving forward on the rate changes.

“I'm not sure why we're even considering this if the city manager tried to withdraw it,” Arterburn said.

He questioned why the council would saddle the next city manager with a program not in the best interest of the city. He said the next city manager might have a different perspective, better idea for utility rates.

Mayor Roger Galloway said the first ready has already been approved.

“It is ultimately up to us (seated council) to make those decisions,” Galloway said.

Councilman Bob Olsen then asked what the council should do until appointing a new city manager.

“So what do we do? Table all business until the new city manager is here?” Olsen said.

Arterburn said he didn't questions weren't fully answered. He then asked Finance Director David Scott about the franchise fees and financial health of the water department and electric department. Scott said the wet and cool 2019 summer had an impact on the water department's revenue, needing as much as three years to return to a positive balance. Without the proposed adjustment, it would take the city even longer.

“You're going to start losing a couple hundred thousand (dollars) a year without the adjustment,” he said.

He said without the adjustment, it would take the City four years to return to a positive balance.

“A lot of it depends on the projects we talked about in the budget,” Palmer said.

He said if the projects are not carried out, it is possible to hold off on rate adjustments.

The city council meets again on Jan. 28 when it could decide on the third reading of the rate adjustments.