City Mulls Further Utility Rate Increases
Proposed increases to several city utility rates means residents will be paying more on their monthly bills, which could begin later this year.
City Finance Director Michelle Henderson laid out concerning figures to the Gillette City Council during a regularly scheduled work session Jan. 22.
According to Henderson, without rate increases, the city’s water distribution, wastewater, and electrical funds will drop millions of dollars into the hole by fiscal year 2024.
Most alarming, perhaps, is the state of the city’s water distribution fund, expenses for which were reported at nearly $8 million with total revenues hovering just above $2 million.
The water fund for the city is split into two accounts, transmission and distribution, with 75 percent of the city’s water revenues stemming from the transmission side.
“If we don’t do anything else, other than follow this plan with just these revenues and these expenses, we’re ending at $42 million [in the hole],” Henderson said.
The recommendation is to begin implementing a series of rate increases, beginning with a 20 percent increase in FY2020.
The initial rate increase will be followed by another 20 percent increase in FY 2021, a 22 percent increase in 2022, and a 24 percent increase in 2023.
With these proposed increases, residents can expect their water distribution bills to climb from a typical $11.28 a month to $24.57 a month by FY2024, an increase of $13.29.
The rate increase for water distribution will most likely not go into effect until after the summer irrigation season, according to City Utilities Director Mike Cole, provided the council heeds staff recommendations.
The city’s waste water fund follows along the same line as water distribution, with current projections putting the fund $5.4 million dollars in the hole, so long as funding from the optional one-percent sales tax continues.
Without the one-percent, the account could dip as low as $46 million in the hole.
To counter this, city staff recommends increasing the waste water utility rate by 8 percent this fiscal year, which will be followed by another 8 percent increase in FY2020, a 7 percent increase in FY 2021, and 6 percent increases in both FY2022 and 2023, respectively.
Residents will be paying $30.77 a month for wastewater by 2024, compared to the current rate of $21.94 a month.
Electrical rates will change as well, with staff recommending a 2 percent increase in FY 2022 and another increase in FY 2023.
A typical city resident can expect their electrical bill to increase from the current $94.55 per month to $98.37 per month by FY2024.
The proposed increase is projected to keep the city electrical fund from falling $8.5 million in the hole, according to Henderson.
As it stands, wastewater is the only utility rate increase that city staff are recommending for this year.
In FY2020, City Utilities Director Mike Cole advised that staff will most likely not recommend any rates increase until after the summer irrigation season.
“We’re going to study this a little bit more in depth,” to be brought up and discussed at a future city council meeting in April or May, Cole said.