Wagoner council rejects consultant’s modest utility rate plan after debate over contracts and impact on residents

A consultant recommended modest, multi‑year increases for Wagoner’s water, wastewater and electric utilities on Dec. 2, but the City of Wagoner council voted to deny formal adoption of the proposed rate resolutions pending further review.

Utility Financial Solutions LLC presented a three‑year plan that would have raised water rates in a phased approach (an initial example 5% adjustment was shown), wastewater rates by roughly 2.9% and electric rates by roughly 2.9% annually. The firm’s analysis projected those changes would stabilize operating results, protect cash reserves and help meet debt coverage requirements as the city faces higher operating costs and a large, progressive repayment schedule tied to its water‑plant debt.

The study’s lead presenter, Don Lund, vice president of Utility Financial Solutions, told the council the recommended increases were intended to avoid larger, later “rate shock” while moving each utility toward minimal financial targets. "Your average customer would see with a 5% rate increase about a $2 increase in their bill," Lund said, illustrating the consultant’s estimate of the impact on a household using 6,000 gallons of water a month. He said similar single‑dollar per month impacts were expected for wastewater and about $1.90 for electric under the firm’s example plans.

Why it mattered: Wagoner’s utilities face three central financial risks the firm highlighted — declining operating income relative to depreciation, falling cash balances if investment does not keep pace with asset consumption, and pressure on debt coverage ratios because of large, scheduled principal increases on longstanding water‑plant financing. Lund said the water plant loan features a progressive principal schedule that becomes substantially larger in later years and will be paid off around 2035; he warned that without a gradual rate path the city would face sharper increases later.

Council discussion focused on two themes. Several members and commenters said they were unwilling to approve increases until the city first re‑examined long‑standing contracts that affect revenue and who actually bears costs — most notably a wholesale contract under which the city sells water outside city limits (referred to in discussion as Rural Water 6 or similar) and the city’s wholesale power arrangements. Others raised affordability concerns for low‑income, elderly and fixed‑income residents and urged alternatives such as trimming operating budgets, seeking grant or ARPA funds, or phasing changes more slowly.

The presentation also laid out technical targets the consultant used: a minimum cash reserve tied to operating expense needs and capital‑replacement risk, an operating‑income (rate‑of‑return) target that helps fund depreciation and replacement over time, and a debt‑coverage ratio threshold typically expected by revenue bond lenders. Lund said the water system is roughly half depreciated and the wastewater system is older, which affects recommended targets. For the electric fund the consultants recommended smaller increases and shifted some rate structure elements (fixed monthly charge and kilowatt‑hour blocks) toward a flatter energy rate and a modest rise in fixed charges to improve equity between high and low users.

Council action and next steps: After discussion the council declined to approve the three rate resolutions and recorded roll‑call denials for the water, wastewater and electric resolutions. The motions on the floor were to deny adoption; minutes show council members used roll‑call voting. Staff and the consultant were directed to return with fuller details on affected contracts, and additional analysis of how proposed changes would affect customers who buy water under the existing wholesale arrangement. Council members who opposed the rate changes repeatedly pointed to the need to examine contract language and the potential for shifting costs onto the city’s residents if wholesale revenue were reduced or the contract changed.

The council did not adopt new rate language; no changes take effect from the Dec. 2 meeting. City staff said they will provide additional documentation on the wholesale water contract and seek clarifications from the firm so the council can revisit the study at a later date.

Ending: The consultant and staff offered to return with contract language, clearer revenue projections, and alternative scenarios that would reduce near‑term impacts on vulnerable residents. The council did not set a timetable for a new vote; staff indicated they would assemble the requested contract information and follow up with the mayor’s office and council in coming weeks.