Chelsea Sets Utility Rate Public Hearing for Apr. 15

By Seth Kinker,

The City of Chelsea set a public hearing for utility rate discussion for Apr. 15 at their Apr. 1 city council meeting.

Around six or seven years ago the city began having yearly presentations and discussions of utility rates, which City Manager John Hanifan gave a brief review of some of that summary on Monday evening.

Electric funds saw a rate increase last year; energy efficiency programs had an impact as well.

A short-term goal with the retirement of coal fleets in the state of Michigan is replacement energy. Alternative sources like natural gas, wind, or solar were all mentioned as viable replacements.

“We expect our supply costs to trend upwards a little bit in the coming year,” said Hanifan. “About 2.5 – 3 percent. A lot of that is weather dependent, time of use. Those are factors that will impact when you’re buying about $7 million dollars in electricity. What staff is recommending is moderate rate increases. (We) never like to present rate increases if we can prevent it. We will be submitting a 2% rate increase for residential customers and a 4% rate increase for commercial/industrial.”

Hanifan noted that with the way their rate structure was established years ago, commercial/industrial rates are significantly less than residential

“About 55-60 percent of our usage is residential in a given year,” Hanifan told Council.

Michigan Power Agency also recommended an increase to the ready to serve charge, the additional dollar per meter provides a guaranteed revenue source for equipment replacement/

Water and wastewater did not have any increase proposed to their rates for either fund with Hanifan also notifying council there would be no millage increases.

“Both of those funds are loaded with bond payments over the year, we’ve upgraded our water and wastewater system significantly in the last decade, decade and a half,” said Hanifan. “What we’re really trying to do in those funds is hold that line, particularly in the water fund, we have
some pretty significant debt service payments that will (take) off about a half million dollar a year which is pretty significant when you consider the fund overall is about 2 million dollars.”

Hanifan told council that they are trying to hold costs down while still having reserves for emergencies and funding necessary projects and maintenance projects.

“That’s a credit to our utilities staff that they’ve been able to really manage their resources,” said Hanifan.

On Apr. 15 staff will be recommending increasing ready to serve charge for electric by a dollar per month per meter on Jul. 1, increasing commercial/industrial rates by four percent beginning Jul. 1, and increasing overall residential rates by two percent beginning Jul. 1.

On Apr. 15 public input on the proposed changes can be made during the scheduled city council meeting. The final city budget will be adopted on Jun. 3.

Seth Kinker

Reporter/Digital Media for The Sun Times News

Leave a Reply