PUC votes to raise water and sewer rates 9% and keep electricity flat

The Public Utilities Commission voted to increase water and sewer rates by 9% and to hold electricity rates at 0% following discussion of rising operating costs and capital needs. All members present voted in favor of the motion to adopt the new rates.

Commissioners and staff said the increase addresses several near-term needs, including higher sludge-hauling costs, increased contractor and plant expenses, and a growing schedule of maintenance projects such as hydrant and main-valve work. Staff noted that a 10% increase would generate about $43,000; the board discussed trimming that to 9% to moderate customer impact while still adding revenue for operations and capital.

The board examined recent revenue and sales figures and the interplay of rate changes with collections. Staff projected 2025 revenues nearer $430,000 (lower than an earlier projection of about $443,000) and explained that volatility in hookup fees and the timing of capital spending affect reported collections. Commissioners said hookup-fee changes reduced fee revenue year over year by roughly $10,000.

A significant driver of the sewer cost increase is sludge hauling: staff reported hauling costs have risen from roughly $100,000 historically to about $175,000, and receiving fees at the offsite facility referenced in the transcript as “Duth” have also risen. Staff also described that the utility is retaining more solids at the plant (improving effluent quality) which increases hauling volumes and costs.

Board members discussed accounting mechanics and fund balances. Staff explained the use of accrual accounting and straight-line depreciation for capital assets and said depreciation and debt-service collections are intended to build fund balance for future capital projects; for 2026 the budget projects a smaller accumulation than typical. Commissioners noted recent capital work (including major pipe work on Fifth Avenue and plant projects) has reduced cash balances and that some future projects could require larger rate adjustments.

On customer impact, one member estimated a representative bill would rise about $6–$10 per month under the proposed change, while staff cautioned that usage patterns vary widely. Staff also quantified revenue sensitivity: each 1% change in the water fund equals about $4,000–$5,000 and in the sewer fund about $6,000–$7,000.

During debate members acknowledged the board could delay a portion of the burden to future years but warned that doing so would likely increase the needed rates later. One member said that if the city ultimately needed to cover a $2 million–$3 million share of a larger $10 million wastewater project, that scenario could require dramatically larger rate increases.

A motion to set water and sewer increases at 9% and to leave electricity at 0% was made, seconded and carried with all members present voting in favor. The commission directed staff to continue reviewing the capital schedule and to return with further analysis of longer-term rate needs.

The meeting was adjourned.