Pierz Council approves 8 percent electric rate increase

City must pay for electricity actually being used

By Terry Lehrke, News Editor

Pierz city residents will see an 8 percent increase on their electric bills, most likely as soon as the statement in February.

And the Council’s decision wasn’t whether the rates should be increased by 8 percent, but rather if the increase should be a bit more.

The city of Pierz buys electricity wholesale from Minnesota Power and resells it to city residents, at a lower rate than what others who purchase power from the company pay.

The city’s goal is to not only offer its residents a better rate on electricity, but to make a little income for city projects to save taxpayers money and to put enough money away for maintenance of its system. To accomplish that goal, the city must charge residents more than it pays for the wholesale electricity.

Although the city has instituted increases in the past due to increases from Minnesota Power, this time the increase is because the city is being billed for the actual power residents are using.

A malfunctioning current transformer (CT) was replaced in May 2012, discovered by a Minnesota Power field agent. The agent was sent when city staff couldn’t find a problem with city meters or the city’s software, although City Administrator Anna Gruber notified Minnesota Power of a problem in January 2011.

It was then that she first noticed a discrepancy in the power being billed to residents by the city, and the amount being charged to the city by Minnesota Power.

Since the CT was replaced, the billing to the city for its wholesale electricity has increased between 7 – 9 percent each month — because it’s being billed for actual electricity used.

Before it was replaced, Minnesota Power estimates the malfunctioning CT was registering 30 – 45 percent below what electricity was being used — possibly since 2009.

The city estimates it must generate at least $90,000 in revenue each year. If nothing changes, the 8 percent increase will accomplish that goal. If Minnesota Power rates increase in the spring, which is a possibility, the city’s goal may not be met.

And the city’s electric fund has taken a hit in recent years, due to a $54,700 true-up fee due Minnesota Power in 2011 and another $35,000 negotiated after Minnesota Power said the city owed it $62,000 for power not registered because of the CT malfunction.

Council Member Don Bujalski asked whether the rates should be increased a bit more, maybe 9 percent, so the Council wouldn’t have to raise rates again should Minnesota Power raise its rates.

Mayor Toby Egan wanted to be sure Pierz residents paid less than what other Minnesota Power customers paid.

“Our rates are very competitive,” said Gruber. “At least on the residents’ side.”

She said it was better for residents to be billed by the municipality than by Minnesota Power directly.

The Council voted unanimously for the 8 percent increase.

An average residential bill reflecting 1000 kilowatts of use now costs $85.87 — with the increase the bill will be $92.34. A business bill, based on using 4000 kilowatts, is now $340.50 and will increase to $365.20 when the new rate kicks in.

The Council also voted to implement a new rebate program through Emergency Management Solutions (EMS) Inc., which offers savings for both residents and businesses.

The city’s current rebate program through Wisconsin Energy Conservation Corporation (WECC) does not offer rebates for businesses.

“We need a community rebate program to offer cost savings to businesses and advice to help save electricity,” said Egan.

Gruber said by putting this rebate program into place the city will benefit if residents put in appliances that use less energy.

“Anything that can benefit commercial businesses is a step that needs to be taken,” said Council Member Matt Bell.

Gruber will put together a contract for the rebate program with EMS to be brought before the Council at a later date.

Pierz City Council Briefs

In other business during the Council’s Monday meeting, the Council:

• Received a report from the Pierz Library which showed total circulation had risen from 20,820 in 2007 to 33,438 in 2012. The library has hosted classes, author visits, musical performances and activities for kids, teens and adults in 2012. The  library’s inventory showed number of items on the shelves in January 2012 was 11,211. The library has seen an increase in the number of teens utilizing the library. On a side note, the library report included a suggestion that a rain gutter be placed on the library’s awning to prevent icy conditions when the snow melts off the awning; and

• Learned City Administrator Anna Gruber and Royalton Mayor Andrea Lauer were coordinating efforts to find grant money for recreational trails through their cities that would hook up to the Soo Line. Public information meetings will be held in each city before any decision is made on a path for such trails.

The next meeting for the Pierz City Council will be held Monday, Feb. 11, at 7 p.m.