Budget billing balances dismay consumers

Timing of the budget plan year didn't allow peaks of February and March to be spread over enough months

By RON LARSEN

Journal Staff Writer

NEW ULM -- She's a single, working mom with a "pretty good" job with one of New Ulm's largest employers. In addition to the usual expenses of owning a home and a car, she pays nearly $500 a month toward the 24-hour care of a son with special needs.

Right now, she's about to return to work after recovering from an injury that left her unable to work. She drew her regular check but lost the 20 hours a week overtime she routinely worked.

So when she got last month's utility bill from the city for $538.97, she was devastated. She was told she had to pay the amount by May 20 or her utilities would be shut off.

One's first reaction is: She should have been on the city's budget plan. "I am on it, for $183 a month," she said.

The next reaction is that, well, this has been a different year, a longer, colder winter coupled with dramatic increases in natural gas rates certainly was unique. "I was billed for over $900 last year," she said.

And, that was for a "mild" winter with lower natural gas prices.

The Journal has found her story is fairly typical for New Ulm utility customers who are on the city's "budget" plan. There's a day of reckoning for many customers at the budget plan year's end.

Ideally, utility customers who go on the city's budget plan should be able to look forward to paying the budget figure each month through the entire plan year.

Obviously, factors unforeseen when the ensuing year's budget plan is implemented can throw the budget plan's estimated payment schedule out of balance.

Timing is everything in determining a budget payment schedule, and that's where the city has been hamstrung because the timing of the budget plan year didn't allow the peaks of February and March to be spread over enough months to bring them within the budget payment schedule.

The city's plan year starts May 1 and runs through April 30. That means the peak usage of natural gas occurs at the end of the plan year, thus preventing the city from amortizing those peaks over a number of months.

If, for example, the budget plan year started Oct. 1, at the beginning of the heating season, the city then would have six months of lower usage to amortize those peaks.

Also, the estimations that have to be made in setting up the budget plan would be made only one month out from the start of the heating season, as opposed to being made six months out as they are now done.

The current budget plan's time-line predates current City Clerk/City Treasurer Gary Gleisner's tenure. "It was inherited, and I believe it was set up that way to give a picture of recent usage."

The budget figure for the individual customer is based upon the previous year's usage and consumption, Gleisner explained. His office does not seek input from the Public Utilities Department on factors that might impact the current plan.

"We began seeing strange energy prices even as early as last May," Public Utilities Director Robert Stevenson said. By August and early September, the PUC not only had a clearer picture of what was happening with natural gas prices but also had firm forecasts of a much colder winter.

Taking these factors into consideration would have made the city's budget plan estimates more accurate.

According to a spokesman for Minnesota Municipal Utilities Association, there appears to be no regulatory problem in changing the budget plan's start date.

"While it is MMUA's policy not to get involved with local utility issues, it would seem that [changing the start date] would be something worth discussing," he said.

For the single mom with the large utility bill, the course is clear. "I'm not going back on the budget plan. I'm going to keep the extra money I've been paying the city and save it for when the big bills start coming in."