CBPU customers facing rate hikes in fiscal year 2022-23


Customers of the Coldwater Board of Public Utilities are expected to see rate increases for water, sewage and electricity in the new fiscal year that begins July 1.

The city’s chief financial officer, Tom Eldridge, and new chief executive, Paul Jakubczak, briefed council members at this month’s budget workshop on the increases.

Rising labor costs are a factor. Jakubczak said employees were looking at a 2% to 3% pay rise, with health insurance costs expected to rise by 4%.

Salaries and benefits will cost CBPU $6.1 million for the next fiscal year.

Payments to MERS for the public service defined benefit pension program will be $1.05 million in 2022-23.

Under the city’s charter, the utility will pay into the city’s general fund 6.5% of 2021 revenue or $2.575 million.

Capital improvements in the utility budget amount to more than $1.92 million and an additional $150,000 for the maintenance of two substations.

The rate increases for water and wastewater services are part of a rate study conducted last year by Mark Beauchamp of Utility Financial Solutions. He was hired to make sure the rates covered the cost of the service.

The increase in the water tariff for the month of July is 2.9% according to the study for water. The increase for wastewater is 1.9% under the plan.

The rate hikes have been proposed to increase each year, with revenues being reviewed every six months to ensure they are within Beauchamp’s designed minimum-maximum rate range. He designed the plan of annual increases to avoid a significant increase affecting customers at the same time.

The rate study ensured that CBPU has adequate cash reserves, adequate debt coverage for future bond ratings, and sufficient revenue to replace infrastructure based on depreciation and of inflation.

Eldridge told the utility board that the electric service would post a loss for 2022-23, but he is unsure of the final number. Board members were sent home with budgeted costs for review so they can make decisions at the June 1 meeting.

The council previously approved a 2% electricity rate hike for September 1. The city is evaluating a time-of-use rate increase for 2023, but has no decision.

The biggest cost increase is for electricity. The electricity cost adjustment provided by American Municipal Power for the coming year showed an increase of one cent per kilowatt hour to $0.07395 per kilowatt hour from the current rate.

Part of that increase comes from grid operator MISO raising costs across the Midwest for not having generation capacity to meet peak demand. Two years ago, it only affected Michigan.

Special rates for a large customer are being negotiated. The rate has been extended but ends June 30.

“We have a few fare classes that we haven’t finalized. And so for budgetary purposes, because they’re not finalized, we’ve put them there basically flat,” Eldridge said.

Eldridge didn’t disclose the potential loss of electricity revenue “because it’s pretty ugly.” He said it was based on conservative figures, but could be cut in half.


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