Sidney City Council considering rate changes to water and electric

SIDNEY, Neb. - The City of Sidney Council has approved the first reading of utility rate changes in Ordinance 1815 and 1816 which would increase the base rate charge for water and electric consumption, yet also lower the energy costs associated with electric, resulting in an estimated five-percent decrease in monthly utility bills for a majority of residential and commercial entities. City Manager Ed Sadler presented the proposal to Council at their meeting Tuesday night. 

“With the budget changes we’ve made, we felt we were over-collecting,” Sadler said. “Not by as much as we’d hoped, like I said, we really hoped to have brought a rate decrease that would amount closer to 10-12%. I think that’s still possible, hopefully, a year from now that they can get the rest of that, but 5% is still worth going after.”  

As presented, the change in base rates for water would address the need to cover fixed costs, such as maintenance, infrastructure, etc., that are not dependent on the amount of water used on a yearly basis. The last time the City of Sidney made a change to the base rate, according to Sadler, was nearly nine years ago, 2011. In the proposal, base rates for water would be increased by three dollars for residential consumers, up to $15 from $12, with the water usage rates staying the same, $1.30 up to 30,000 gallons and increasing above that total. 

Sadler pointed out the current deficit spending the Water Department has been utilizing for the past few years as some 25-30 year bonds and recent water work have added to the estimated operating expenses. If the proposed change to the base rate is approved, deficit spending is estimated to continue for the next three years, but once some of the bonds are paid off by 2023, then the department would begin to slowly rebuild their cash reserve which would be down around $400,000 at that time. 

With the changes to electric consumption, Sadler noted the five-percent increases which were instituted four and two-and-a-half years ago to offset the potential costs of the lawsuit between the City and the Municipal Energy Agency of Nebraska (MEAN). City officials were notified in 2015 that their contract with their electric wholesaler, MEAN, would be changed and the net cost for electricity would be about $800,000 per year. After being informed that the Nebraska Supreme Court had ruled in favor of MEAN last September, the previous rate increases meant the City had the money to pay the required service charge. Since that has been settled and paid up-to-date, Sadler feels comfortable in proposing lower energy rates per Kilowatt hour for residential and commercial entities with a $2.50 increase in the base rate. 

As outlined in the proposal, the base rate for electric service to a residential consumer will increase to $20 from $17.50 which, similar to the Water, is there to pay for fixed costs at the Electric Department. The energy rate, however, will be decreased by slightly less than two cents per Kilowatt hour. In the Summer, June 1 through September 30, the same rate will apply for all Kilowatt hours used, while in the Winter the rate will fall by another eighth of a cent if the consumption exceeds 600 Kilowatt hours. Based on projections, that would lead to between a four- and seven-percent decrease in a majority of residential and commercial monthly electric bills, dependent of the amount of Kilowatt hours used. 

The hope with these proposed changes, Sadler says, is to equalize the rates for all times of the year and between the different entities. As he describes, the City pays the same for electricity in June as they do in December, so the rates should be the same for consumers too. And, as the City continues to search for a potential new electric wholesaler, the opportunity to decrease the rates again within the next 12 months is a real possibility. 

“The overall should be another 5-to-7-percent decrease, if indeed we can truly manage to find an alternate transmission source,” Sadler explained. “We are still looking for options there that are a lot less expensive, and we think we’ve identified those. I think that’s still in the realm of possibility, I would love to see them pursue that, and then be able to reduce rates again.” 

A complete copy of the proposal may be seen online at cityofsidney.org under the “Current Council Packet” listing. The changes to the two ordinances must still be read and approved two more times, January 14 and 28, before going into effect March 1, 2020.

- Dewayne Cook