Debate on utility rate ordinance continues
City directors continued to debate Ordinance 21-23 concerning adjusting utility rate increases for 2022-2027 during the city board meeting Nov. 16.
According to City Administrator Phillip Patterson, the proposed ordinance will decrease the annual utility rate increases on electric, water and wastewater but still increase the rates on solid waste. One member of the audience and two city directors opposed the ordinance.
The ordinance passed its second reading with Directors David Allen and Lesa Rissler voting against it.
A rate study conducted by 1898 and Company showed that the increase did not continue going by the Consumer Price Index (CPI), which the city has done since 2014.
The electric rate increase would decrease by 50 percent; the water rate increase would be reduced by 70 percent and the wastewater increase would drop by 20 percent, Patterson said.
Patterson said solid waste rates would increase by 60 percent based on the five-year history of CPI being around 1.5 percent.
Background
Patterson reminded the audience and board that the city adopted three ordinances in 2013, which established annual rate increases for electric, water and wastewater.
In March of 2013, the city passed Ordinances 13-15 and 13-16, which raised water and wastewater rates annually from 2013 until 2016, according to a staff report prepared by former City Administrator David Cameron on Feb. 7, 2013.
Beginning Jan. 1, 2017, and each Jan. 1 after that, city staff is including a CPI annual adjustment to the fee structure, the report states.
According to a copy of the ordinance in June of 2013, the city board passed Ordinance 13-24, which raised electric rates.
The ordinance states: “Unless otherwise provided by the board of directors, beginning April 1, 2014, and each April 1 after that energy charges shall be adjusted annually in accordance with All Items Consumer Price Index for Urban Consumers (CPI-U), South Region for the preceding calendar year.”
According to a staff report prepared by Art Farine, the former director of the electric department, on May 14, 2013, the Grand River Dam Authority (GRDA) was considering an added capacity surcharge during the super-peak months to demand charges per kilowatt-hours in the changes made in 2014.
GRDA also changed the language concerning power factor charges, which resulted in GRDA not giving credit for power factor above 98 percent, the report states. GRDA also increased charges for monthly power factors, which are less than 98 percent, the report states.
Due to this change, the electric department had to add additional capacitance to the lines or pay approximately $25,000 in power factor charges.
In August of 2015, staff found many errors and outdated information and a lack of definitions and clarity on brush, dumpster rates and administration, according to a staff report prepared by Solid Waste Superintendent Don Tennison.
Staff included an annual CPI adjustment clause as well as penalties for late payments on
accounts billed monthly, the report states. Also included were deposit rates for roll-off containers where none previously existed, the report states.
Audience reaction
During the public comment portion for the ordinance, Larry Kenemore spoke. Kenemore began with the exact words he ended his comments with during the last city board meeting: “When is enough enough?”
Kenemore said he and his wife upgraded their central heat and air in 2019. The couple’s usage on gas and electricity went down by 20 percent, but their bill is the same dollar amount as before they upgraded their central heat and air, Kenemore said.
“You are talking about raising the rates and now you may be saying, ‘oh we’re not going to raise it this much or that much’ but you are talking about raising the rates whatever amount,” Kenemore said.
Kenemore also said the city needed to stop saying that it would have to cut the police and fire budget if utility rates are not raised, and he thinks it will come back and haunt them in the very near future.
Reaction from the board
All the board members addressed the issue. Rissler said she agreed this ordinance should be on the agenda and that she is surprised that a municipality would ever consider using the CPI to adjust utility rates.
“I do not completely agree with what is being proposed,” Rissler said. “I think we should consider rate changes every year. Many variables affect the economy on a weekly, monthly and yearly basis.”
Director Brad Burns said he doesn’t like inflation and that the board agrees to disagree in certain areas and this is one in which it disagrees.
Burns said he didn’t know how people run their budget, but he knows that when things increase, he goes without certain things in life and cuts back on his budget.
He said the board did not like that utility rates were based on the CPI and that it was before his time as a board member.
Burns also said there was a rate study done and that some board members did not like the study and the company and claimed that some board members verbally abused the company’s representative.
Allen wanted to remind everybody that it disgusted him to hear statements about other cities doing something and Siloam Springs having to follow suit. He said was disgusted to hear scare tactics about cutting the budget for police and fire.
“We are outpacing the ability of our citizens to be able to afford reality,” Allen said. “I will remind everybody here we’re supposed to represent these citizens.”
Allen also said he recalled Director Mindy Hunt asked for an analysis if the city chose not to raise rates but has not seen anything presented to the board.
Patterson said he sent the analysis during the biweekly email update to the board, which Allen said he did not receive.
Another issue raised by Allen was why is there only two options of voting for the ordinance or sticking with the CPI-based rate increases?
Hunt said she had concerns about the rate study because it was a large amount of money and there was a perception that rates would automatically be raised. The study did recommend increases but a lower increase on at least three utilities.
The perception now is that the city has only two options, Hunt said.
“We are either going to get a larger increase in utilities, or we’re going to get a lesser increase in our utilities,” Hunt said.
Hunt said she still had not made up her mind and encouraged citizens to continue to express their concerns and opinions about this issue.
Director Marla Sappington pulled her last three utility bills, and the amounts fluctuated, and that getting on levelized billing helped her budget better.
Sappington said she works with people who have received shut-off notices, but she has helped them work out payment plans and even paid part of their bills after her clients got on levelized billing.
After visiting the CPI website and pulling the numbers, Sappington learned energy costs are expected to go up 30 percent.
As a city, there are a lot of factors there, and it boils down to people living within their means and knowing what they can and can’t afford, as well as conserving energy, Sappington said.
Having lived through two plant shutdowns in Siloam Springs, Sappington said she had to make payment plans on her utilities.
“I know all this, and my heart goes out to you, but you’ve got to learn to live within your means,” Sappington said.
Sappington said she also doesn’t know what GRDA will charge the city, and it is a little scary.
Director Carol Smiley reiterated she wants to listen to everybody but does believe in running the city like a business and that rates are going up.
Director Reid Carroll thanked the city for the study because it allowed the board to operate and work from the point of knowledge and not a guessing game. A concerned citizen approached Carroll about the increase, saying that the city was trying to gain more money for pet projects.
Carroll did not say who the person was but said the city passed ordinances to prevent the board from taking money from the electric department and spending it on whatever.
Carroll said the city is also looking at other areas for income so Siloam Springs could be more diversified and do better for its citizens for this community. He called Siloam Springs a city on a hill that other cities are paying attention to it.
“If there is an increase, I think it’s because it’s for what we feel is best for the city, and if there’s not an increase, we feel like there’s a way we can manage it and make through,” Carroll said.