Utility Rates Comparison

This 2016 chart shows the differences in utility rates among a collection of southern Minnesota cities (Note: rates in each city will have changed slightly in the last two years). Northfield's rates are higher than nearby Faribault and Owatonna, but lower than Waseca and Mankato. (Graphic courtesy city of Faribault)

The average residential customer in Northfield could see their utility bill increase by about $1 each of the next five years.

Patty Kettles, vice president of the consulting firm Springsted Public Sector Advisors, told the Northfield City Council at its Oct. 9 work session that the city's utility expenses are projected to increase by 2-6 percent in 10 years, with a .5 percent growth in users. To make up for the increase in, Springsted recommends the city implement a gradual uptick in utility rates over the next five years.

"We look at the historical performance and the 2018 budget to make the projections going forward," she said.

The council will likely vote on whether to accept the recommendations at an upcoming meeting.

If the changes pass, the average user in Northfield will see their utility bill during non-winter months increase from $67.69 per month in 2018 to $68.34 in 2019. By 2023, the bill would be up to $71.86 per month.

During winter months, the average bill would move from $84.99 in 2018 to $85.81 in 2019. By 2023, it would be up to $90.04.

However, the council will likely reset the rates annually, so those projections could quickly change.

Springsted used some specific businesses in town to indicate the commercial impact of the rate changes. Family Fare in downtown Northfield would move from about $1,396 per month in 2018 to $1,412 in 2019. Post Consumer Brands, meanwhile, would move from $101,027 per month in 2018 to $102,074 in 2019.

Comparatively speaking, Northfield falls somewhere in the upper-middle of peer cities when it comes to the average utility bill. Waseca customers have a much higher per month bill, while Faribault customers see a significantly lower one.

There are four city funds that determine the utility rates: water, storm water, sewer and garbage. The city has reported a positive cash flow in each of the four funds in recent years, and each fund has built a reserve built. That can be important, in years like 2018, where $300,000 was taken from the garbage fund to pay for emergency cleanup efforts after the Sept. 20 storms.

Springsted recommends the city raises the water rate by 1 percent, sewer rate by 1 percent and storm water rate by 4 percent over the next five years. The garbage rate, Springsted suggests, can remain the same for now.

In responding to the report Oct. 9, Councilor Erica Zweifel wondered if the city should consider its vulnerability to rain and flooding events within the utility rate framework. She suggested the city may need to resize its sewer utilities to adjust to the new normal in terms of climate.

"We’re on a river; we have a wastewater treatment plant. We know that rain and flood events will impact storm water, impact sewer and could impact our clean water if, regionally, it became big enough of an issue," she said.

Public Works Director Dave Bennett noted there is around $1 million or $2 million set aside in the storm water fund that could be used for future capital projects. He said action steps will develop out of the city's currently in process climate action plan, and utility rates and policies could be looked at when those action steps come forward.

Reach Associate Editor Philip Weyhe at 507-645-1115 or follow him on Twitter @nfnphilweyhe.

©Copyright 2018 APG Media of Southern Minnesota. All rights reserved. 

Tags

Northfield News and Faribault Daily News reporter. Email at pweyhe@northfieldnews.com. Call at 507-333-3132.

Load comments