Hike in electric rates likely next year

Higher prices for natural gas will

be passed on

to consumers

By CHRIS VETTER

Journal Staff Writer

NEW ULM -- Area residents will likely see an electric rate increase next year. However, rates will stay fixed for natural gas, water and wastewater costs.

The Public Utilities Commission met for more than three hours Tuesday night, mulling over a 92-page budget proposal. The budget will likely be finalized in December.

While the utility has no plans to increase the rate for natural gas, New Ulm residents should not misinterpret that statement into thinking their gas bill will be unchanged. The utility will not be charging more for its services, but will pass the cost of higher gas onto consumers.

"Our price goes up a buck, their price goes up a buck," said Robert Stevenson, director of utilities. "We're not going to ask for a change on the rate schedule."

Higher natural gas prices are unavoidable this year, he added. And the utility still must pay its employees and purchase equipment.

"We mark up the gas. We have expenses," he said.

The revenue from the fuel adjustment will rise $2.3 million over the 1999 budget and $2 million above the 2000 budget, the budget reports.

Stevenson said the proposed 2001 budget reflects few major renovations, but that will change.

"We've got some big-ticket items in the future," Stevenson told the Commission. "And we think those are valid and important. So, we are trying to save our pennies this year."

Among those big-ticket items are a new water tower and new wastewater lines in the North Highland expansion area, he said.

"We don't the expense or the timing of it," he added.

The utility is establishing a sinking fund to set aside money for the larger items.

A new water tower could cost about $750,000, Stevenson said.

The preliminary 2001 budget states that the utility will have a net operating surplus of about $1.7 million. The utility anticipates operating revenue to be $28.3 million, while expenses will be $26.6 million.

The electric division comprises most of the projected revenue, with $14.6 million expected, while money from the natural gas division is expected to top $7 million.

PUC members spent a majority of its meeting discussing plans for the electric division. Under the proposed rate increases, residential rates would increase 1.2 percent, small commercial rates would climb 2.8 percent, large commercial rates would rise 2.25 percent and municipal rates would move up 5 percent.

Stevenson said the commission will likely vote on those increases at its next meeting and those rates would become effective in January.

A new gas turbine is 'rate-neutral,' and is not responsible for the hikes, Stevenson said.

"We would be asking for these rate increases even without the gas turbine," he said.

The PUC board plans to spend $295,000 in new conductors and devices that will go under ground, including a new $75,000 feeder to the North Highland area.

"We're putting things under ground as fast as we can," Stevenson said.

One of the larger projects planned for 2001 is to replace a 350-foot steam main under First North Street, which is causing some significant maintenance costs, the budget states.

In the natural gas division, the utility plans to spend $70,000 on moving meters outside and another $48,000 on replacing obsolete meters.

The board is also considering buying into a new gasline project that will extend from Fairmont to Hutchinson. The proposed five-year plan shows the utility allocating $6 million to become a part of the gasline, although the board has not voted on whether to become a partner.

The water division includes $50,000 for repairing cracks on the wall and along window sills in its building. The utility previously reached a settlement with an area engineering firm over design errors that could have led to premature cracking. City Manager Dick Salvati said the check for $17,500 has already arrived. That money will be used as part of the repair costs.