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Utility committee reviews draft budgets and weighs water-rate options
Summary
Committee members discussed draft electric, water and sewer budgets, proposals to rebuild utility reserves after a winter-storm loan, and water-rate scenarios that would combine a higher base charge with a volume rate (committee discussion centered on an illustrative $12 base / $10 volume option with use of prior-year funds to cover a remaining shortfall).
Salem City’s Utility Committee spent the meeting reviewing draft operating and capital budgets across electric, water and sewer funds and exploring rate options and reserve-rebuilding strategies.
Stacy, a city staff member presenting the fund slides, said the draft budgets project roughly $7.0–7.5 million in electric revenues depending on assumptions and highlighted a historic spike in purchased power tied to a winter storm that required a prior draw from reserves. On the water side, staff showed a draft-year deficit of about $546,000 before transfers and explained that transfers to the water DNR (replacement) fund — including $502,000 intended for water-tower painting this year — influence the operating picture.
Committee members examined interactive rate-model scenarios on screen. One member framed the trade-off plainly: raising the monthly base charge shifts fixed costs across customers while volume charges preserve usage-based signals. After testing multiple permutations, several members converged on an illustrative approach that staff noted would be in the ballpark of a $12 monthly base charge with a $10 per-unit volume rate while using a modest draw from prior-year funds to cover roughly $131,000 of the remaining shortfall. "If we're somewhere in the ballpark here... $12 base rate, $10 volume rate, and then pull the remaining $131,000 from prior year funds," a committee member summarized during the live modeling.
The committee also discussed rebuilding emergency reserves after paying a winter-storm-related obligation. Staff described an option to stop the monthly repayment (approximately $20,000 monthly, ~ $240,000 annually) and redirect those dollars back into the reserve until the target (25% of operating expenditures) is restored. Multiple members favored using prior-year fund balances or redirecting the former loan repayment to rebuild reserves rather than another immediate rate increase.
No formal rate change was approved; staff will bring revised rate proposals and the electric rate-study recommendations back to the committee at a subsequent meeting. The committee requested additional detail before any formal recommendation or ordinance to change rates.
