Metropolitan Utilities District customers will pay a few dollars more each month for gas and water next year.
The MUD board voted 6-1 Wednesday to raise water rates by 5.5 percent — adding $1.25 a month to an average residential customer's bill — and gas rates by 2.4 percent, which will add another $1.24.
The new rates go into effect Jan. 2. This will be the eleventh time the district has raised water rates since 2001, and the ninth for gas.
The rate hikes are expected to bring in $7.6 million in additional revenue next year, Chief Financial Officer Debra Schneider said. She said the extra income is needed to cover increasing personnel costs, service bond debt and build cash reserves ahead of a new gas infrastructure bond anticipated for 2017.
Six of seven board members agreed.
“Management knows better than anyone else what it takes to run this place,” said board member Thomas Dowd, who has been with the district for three decades.
Previous board votes to delay or temper rate increases for political reasons have put the district “behind the eight-ball,” he said.
Steve Patterson was the lone opponent, saying it didn't seem prudent to raise rates to build cash reserves.
“It looks like this is a rate increase we can avert today,” he said.
Interim President Mark Doyle said the district needs the revenue to accelerate a program to replace old cast-iron mains, among other things.
The district also raised its capital facilities charge by 2 percent. This fee, which pays for new water mains, is assessed when a meter is set for a new house, for instance. The change will not affect existing customers, spokeswoman Tracey Christensen said.
The rate adjustments were included in the district's 2014 budget, which the board also approved. Even with rates going up, Schneider said, the district beats the national average and is comparable to other Midwestern utilities in terms of affordability.
The budget assumes that the board will not approve rate increases in 2015-18. That doesn’t mean there won’t be a rate increase in the next five years, Schneider said. But assuming that rates will be frozen gives the district a more accurate look at its financial health.
“We’re hoping we can manage the expense side to mitigate future rate increases,” she said.
Other 2014 budget assumptions: • The board will not approve rate increases from 2015-18, creating a shortfall that will need to be funded by cutting expenses and increasing revenue. • Servicing the district's outstanding bond debt will cost $15.9 million in 2014. • The district's customer base will grow at half a percent each year through 2018.