Utility rates to increase 12 percent

PIERRE — After weeks of discussion, the Pierre City Commission increased utility rates by 12 percent Tuesday.

The three percent increases in water and wastewater rates and six percent in electrical rates will be applied to January bills and continue through 2010.  

The increases come in response to a 13 percent increase in price from Western Area Power Administration and to pay for operations. Included in the six percent electrical rate increase, 2 percent is to be set aside to begin paying for a multi-year investment in $21 million electrical system overhaul.

In 2010, the commission will determine the length of the loan to pay for the system. That work will be paid through reserves as well.

In 2010, the average residential user can expect to pay an additional $10.54 a month in utility bills.

The commission has looked at 20-year and 30-year loans for the major electrical system work. In either case, residents will pay 2 percent increases in utility rates from 2010 to 2015 and a one percent increase in 2016. After 2016, the average residential user will pay $20.20 for infrastructure improvements until the loan is paid off.

One resident, who attended Tuesday’s meeting, spoke against the prospect of residents paying $20.20 each month in the future independent of utility rate adjustments for things such as inflation.

“You’re grandkids won’t be able to live in Pierre because of the utility rates,” John Manning said.

The electrical system project is set to be completed in two phases, beginning in 2011 with construction of a new substation and new lines. In 2015, the city would upgrade substations to fix a system that is faulted for a record number of power outages over the summer. Coincidentally, an outside agency identified the deficiencies in the system through a planned study after the blackouts.

“We’ve been working on this issue for a long time,” Mayor Laurie Gill said. “I want to make sure the commission has all the information as we’re starting to work through the bonding issues.”

Gill said she expects loan discussions to occur in about nine months. She said it’s possible the second phase of the project will be less expensive than expected as technology might reduce costs.

All commissioners said they received comments from the public about the future work.  Jamie Huizenga said he too will be paying for the increases in future years.

“I consider this responsible planning,” he said. “We are at capacity. We need to take that seriously.”

The work will allow more power to go to developing parts of the city, namely the northeast section of Pierre.