The City Council of Webster City took the first steps Monday night to increase the rates charged to electric customers in the community in order offset increased charges from the city's wholesale electric provider, Corn Belt Power Cooperative.
The council voted to raise the base electrical rate by 20 percent, an increase that would total $3.80 per month for residential customers. Councilwoman Linda Conaway cast the only nay vote.
For the past two years, the city has passed along lower electric rate increases than those that the city received from its electric wholesale supplier, according to City Manager Ed Sadler. The most recent increase from the wholesaler was 11 percent. A rate increase of approximately 6 percent to Webster City customers was approved earlier this year.
At the time, Sadler warned the council that there might be a need to revisit the rates should there be a long hot summer with high demand.
"We chose to raise our rates only 6 percent and eat the other 5 percent," he told the council. "We tried to absorb those costs through cuts and cost-saving measures."
"We just couldn't do that with the heat and the demand charges we had this summer," he said.
Sadler then proposed three different options for the rate increase.
"It's 5 percent of our total revenues, which is $475,000. That's what we need. Our total revenue is just under $10 million."
Sadler told the council it could raise just the base charge by 20 percent to come up with the same 5 percent overall. The second option would be to raise the kilowatt hour charge by 6.75 percent or both the base and kilowatt hour charges could be increased by 5 percent.
Conaway questioned whether a dramatic conservation effort by the public would effect the needed revenues if the kilowatt hour increase was approved .
"Yes, that could be an issue," Sadler said.
"I don't like raising the rates at all,"said Councilman Jerry Kloberdanz. "I'm just trying to find way to make this simple.
"This has been a nightmare every time we deal with the rates," he said.
The council will likely take another look at electric rates in December or January when another increase from the wholesaler is expected.
Councilman Geary Meyer stressed that the rate increase had nothing to do with the economic development funds used to provide a loan to the former electric car company, Drive Tek Iowa. During the public comments of Monday's meeting, former Kendall Young Library Director Paul Dahl expressed concern over the anticipated rate increase. He challenged Sadler to give up his salary for a year to help pay back the loan funds.
"I think the money that you loaned the electrical car company has created some of this problem with the electrical rates," Dahl said.
"No, it has nothing what's so ever to do with that," said Mayor Janet Adams and Sadler agreed.
"This (rate increase) is for your shortfall this year, revenue in, expenses out," Sadler said.
The City Council will have two more readings on the proposed rate increase in the coming weeks.