PUC

budget

includes

rate hikes

Pipeline also

discussed

By RON LARSEN

Journal Staff Writer

NEW ULM -- The Public Utilities Commission Tuesday night approved a $31.8 million 2004 budget that will be fueled by rate increases affecting four of the New Ulm Public Utilities' five enterprise divisions.

NUPU anticipates a net income of just over $1 million if it hits its revenue target.

In order to do that, however, Utilities Director Gary Gleisner presented a rate revision portfolio for the Electric, Natural Gas, Water and Wastewater Treatment divisions for commission approval.

Commissioners approved a 2 percent across-the-board rate increase for the Electric Division, a 1.3 percent increase for the Natural Gas Division, a 2.4 percent rate increase for the Water Division and a two-tier rate increase for the Wastewater Treatment Division wherein the monthly base rate would be increased from $2 to $3.50, along with a 7.5 percent flow rate increase.

Gleisner said the Electric Division, which hadn't had a usage rate increase since 2001, would realize an estimated $170,345 in additional revenue. The 1.3 percent rate increase is expected to produce about $48,409 in additional revenue for the Natural Gas Division, and the 2.4 percent increase would result in about $44,433 in additional revenue for the Water Division.

The Wastewater Treatment Division, he said, would gain an additional $90,000 from the monthly base rate increase, as well as an estimated $142,000 from the flow-rate increase.

"This is the first year since I've been here (in city government) that profitability has been budgeted for wastewater," Gleisner told the commission.

"I hope everyone realizes that none of us wants to raise rates, but it's necessary to maintain revenues and the strength of the utility," Commissioner Tom Hendel said, in making the motion to approve the rate increases.

The budget then was approved without discussion.

Hutchinson Public Utilities' problems with the Minnesota Environmental Quality Board which suspended HPU's pipeline routing permit last Thursday created the need for contingencies when the commission considered approval of a Natural Firm Transportation Capacity Agreement between NUPU and the City of Fairfax for providing natural gas from the Hutchinson pipeline to the City of Fairfax.

After discussing the legal ramifications if HPU were unable to resolve the differences with the EQB with the commission, Assistant City Attorney Susan Nierengarten recommended the agreement be approved "contingent upon the satisfactory settlement" of HPU's differences with the EQB.

"I'd hate to be put in the position of we not being able to deliver on the contract (with Fairfax)," Nierengarten said.

As the motion was being made to approve the contract, Nierengarten suggested approval should also be contingent upon completion of the interconnection with the Hutchinson pipeline at Fairfax.

Gleisner reported Hutchinson Public Utilities "has essentially completed the natural gas pipeline. Testing is complete and taps have been installed for the town border stations along the route. Gas is expected to flow by the end of the year."

He said NUPU's branch supply pipeline "is also essentially complete. Testing has been done, and the contractor (Minnesota Limited, Inc.) has left the site."

However, he said NUPU still is awaiting components for several border stations so "we have not hooked up out on KC road." The components are expected to be shipped within the next two weeks, and once installed, the pipeline will be operational, he said.

The utility showed a net loss of $515,282 for November which is about $158,000 more than was budgeted, Gleisner said. For the year, the utility is showing revenues totaling $29,700,250 and a net margin of $274,027.

Gleisner called the commissioners' attention to the PUC and city's combined investment portfolio, which at a 2.99 percent yield in December, isn't performing very well.

"That's the first time below 3 percent since I've been here," Gleisner noted.

The commission also approved a wage-benefit adjustments package for the PUC's full-time, non-unionized employees which carried a general wage adjustment of 3.5 percent for 2004.

"It should be pointed out that because of changes made in the benefits package, it represents only a 2 percent increase in the total wage package," City Manager Brian Gramentz explained.