Moose Lake Star Gazette - Serving Carlton and Pine Counties Since 1895

By Lois E. Johnson
Moose Lake Star-Gazette 

Two years of 15% rate increase

 

November 23, 2017

Lois E. Johnson

This huge diesel generator was removed from the Moose Lake power plant on Monday, November 6. It is one of two generators to be removed to make way for a new (used) generator that will be installed in the spring.

The Moose Lake Water and Light Commission voted to drop the electrical rate increase from 25 percent to 15 percent each year for two years at its meeting on Wednesday, November 15, after hearing from representatives of two major users and two city officials.

"The rate increase of 25 percent for the new school and 45 percent for the old school was just too much," said Superintendent Robert Indihar. "We did not plan for the increase in our budget. Our fiscal year goes from July one year until June the following year. We have hired the people that we are going to hire so the budget is pretty much set. I'm wondering if there could be a delay in a start date for the rate increase."

Indihar explained he was told by Harlan Schmeling, the superintendent of the Water and Light Commission, that the old school had been charged a reduced rate.

"That's a pretty good hike," said Indihar.

Kim Hartman and Tom Thackery, a consultant from Mercy Hospital, also requested a delay in the rate increase.

"Like the school, there are budget concerns and staffing concerns," said Thackery. "This hospital is at a disadvantage compared to other hospitals."

Water and Light Commission staff exchanged information sheets with the hospital representatives to compare the bills for Mercy as compared to hospitals of a similar size.

"I think there is an 11.9 net cost per demand kilowatt for Mercy, as compared to 9 percent for the other hospital," said Thackery. "We ask you to take another look at the rates and reconsider the increase."

"Our fiscal year starts in October," said Hartman. "We didn't hear anything about the rate increase until it hit the paper. That's a pretty big hit for us."

Commission Chair Curt Yort said the decision to raise the rates was made in August.

Later in the meeting, in comparing the electrical rates for the two hospitals, it was found the increase would amount to Mercy paying approximately $2,000 a year more than a hospital of a similar size, depending on monthly usage.

Sally Iund, Water and Light office manager, said postcards about the rate increase and a date for an information meeting were sent to each customer, both residential and commercial.

Mayor Ted Shaw said the postcards did not state the rate increase would be 25 percent. "The cards just said there would be a rate increase and an information meeting," he said. "A 25 percent rate increase is not normal."

It has been said the state institutions ­- the prison and the sex offender program - are under a joint powers agreement for electrical rates. Shaw asked when the contract will expire.

"The contract ended in May," said Iund. "The state is not under a contract now."

"We're talking to them," added Schmeling. "They helped us when we built the south substation. They gave us the land and helped us purchase the transformers. We are charging them according to the old contract until we have a new one. They will get a rate increase."

"The purchase of power is where we are hit the most," said Commissioner Mike Peterson.

"The rate increase is just to cover operating expenses," said Yort. "The rest of the costs come out of savings. There will be some additional costs that we are not aware of yet with the implementation of the new contract. We will be using Great River Energy's transmission lines starting in 2019 when we'll be buying power from American Energy Partners. The rate will be stable for 10 years after we start purchasing power from AEP. I think we will be borrowing money to pay for our operating expenses next year."

"We get paid for our ability to generate power," added Iund. "That ends in May. That amounts to a sizable chunk that we won't be getting."

City Administrator Tim Peterson urged the commission to once again sell bonds to pay for the purchase of new equipment and upgrades to existing equipment, with a projected cost of $10 million.

Schmeling said payments on the bonds would be sizable and there would also be interest to pay.

"This isn't a wish list," said Schmeling. "We have to purchase new equipment for the safety of our crew. We'll end up paying $15 million when interest is added. Plus a $10 million bond puts a heavy debt on our rate payers."

Mike Peterson made the motion to drop the rate increase to 15 percent each year for two years, and Yort seconded the motion. Commissioner Steve Devine-Jelinski voted no when the vote was called for. The motion passed by a two to one vote.

The new rate will begin in January 2018.

Schmeling reported the sale of Moose Tec wireless is in the process, but he could not give any more information because attorneys are reviewing the sale. The new owner of Moose Tec will take over in January, it was said. Moose Tec customers will receive information in the November or December billing.

The two old generators have been removed from the power plant, and the concrete is being installed for the new generator that will be coming in the spring, said Schmeling.

"The project is on schedule and on budget," he added.

The next meeting of the Moose Lake Water and Light Commission is Wednesday, December 20, at 4 p.m. in the conference room at the civic and community center.

 

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