City council considering hike in utility rates

Published 8:00 am Wednesday, March 30, 2016

Users of the city’s three core utilities may be in for a series of rate increases this spring and fall.

The Dowagiac City Council conducted the first reading of three proposed ordinance changes that would introduce a pair of rate hikes on the city’s electrical, water and sewage services during council’s meeting Monday. If approved by the council, the first of these increases would appear on customer bills beginning in May, with the second appearing in October.

On the electrical side, the city would increase the ready-to-serve charge by 8 percent and the commodity charge by 10 percent, with the latter increase split evenly across the two seasons. For example, a household that uses 1,000 kWh of power every month, which currently pays $111.06, would begin paying $114.47 per month beginning in May, and $116.96 beginning in October, according to city estimates.

These proposed rate increases were brought about mainly due to changing requirements on power companies, requiring increased usage of renewable energy sources and cleaner burning fuels, both of which have driven up the price for fuel, said City Manager Kevin Anderson. As a result, the city is currently paying more for wholesale power to resell back to the public, at a rate in excess to the rate of inflation.

“Every utility is in that same position, where those rates are moving [up],” Anderson said. “So no matter who your provider is, you’re getting that piece.”

The proposed electric hike would allow the city to maintain its current operational levels, as well as allow for continued investment in capital improvements, the city manager said.

The increase to water and sewage rates will also be a slight increase, split nearly evenly across the two seasons. The suggested hike would help continue to fund capital improvements to the city’s water system, as well as to maintain the current level of service, Anderson said.

A home using 4,000 gallons of water would see an increase of $4.94 to its water and sewage rates in May, with an added $3.88 bump in October.

The city last increased its electrical and sewage rates in 2014, and its water rates in 2010.

Due to the fact these increases require changes to the city ordinance, the council must wait until its next meeting, on April 11, to vote on whether or not to pass them into law.