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Utility faulted for spending money on new HQ instead of system upgrades
TELL CITY - A three-month-old proposal to raise electric rates in Tell City drew more fire Monday, much of it from customers who questioned why the Tell City Electric Department spent hundreds of thousands of dollars on purchasing and renovating its new Main Street headquarters instead of improving aging substations and other crucial systems.
After an hour of discussion, the city's common council postponed any action until at least its April 7 meeting, giving the public more time, Council President Gerald Yackle said, to consider the utility's need for extra revenue to counteract shrinking profit margins and to pay for upcoming capital improvements.
Monday's council meting was held in the William Tell Senior Citizens Center, the first of Mayor Barbara Ewing's quarterly plans to extend city-government meetings into local neighborhoods. The center's main building - used for weekly dances - was more than half filled by city residents, many of them against the electric department's rate plan.
The utility proposed average residential rate hikes of 8.6 percent in December, with increases for all classes estimated at 12.9 percent. The council discussed the ordinance at a January hearing and again at its meeting last month, but took no action. Challengers of the utility's plans have questioned the fairness of large increases of more than 40 percent facing users in some rate tariffs, and asked where the proposed $1 million in new revenue would be used.
The utility has said it needs to spend money on substation upgrades, a new line truck and to rebuild reserves it is supposed to maintain.
At February's council meeting, the council voted 3-2 to have City Attorney Jim Tyler prepare a schedule that would phase in the new rates and charges over two years, with the utility getting 60 percent of the increase the first year.
With four members present Monday - Councilman John Little was absent - the council again listened to supporters and opponents. Electric Utility Superintendent Marlow Smethurst and engineer Merlin Groves detailed how the utility came up with its proposed increases by trying to align rates with the cost of providing power. The result, they said, is a a fair system.
"Our goal was to create fair rates and charges on all the consumer classes," Smethurst said during his presentation, making passing reference to a guest column opposing the utility's plans published in Monday's News by retired electric department Superintendent Jack Joyce.
Smethurst said he had written a reply to Joyce's questions about the rate increases and the utility's operations and would have it published in the newspaper. It is published as a guest column on Page 7B of today's issue.
When looking at residential rates, Smethurst said he calculated the percentage increases for small, medium and large residential users and said the average increase after two years would be 15.78 percent, including a $2.25 increase in the minimum monthly charge assessed customers.
He then outlined the increases for various-sized businesses in the city. The largest group covering 353 customers would see 20-percent increases over two years. Customers with higher electric demands would see larger percentage increases.
Smethurst was challenged on the basic customer charge now assessed on users. It stands at $5.75 per month but has been proposed to increase to $9. Current bills don't break down the customer charge but a new format expected to be introduced soon will, Smethurst said.
Yackle said he has heard complaints about the customer charge as well as the increase in rates themselves. "My phone's been ringing off the wall. It's the hottest topic in town," he said.
Yackle said he understood the concerns of ratepayers, saying "we're in a recession" but he acknowledged that residents also want reliable power. Achieving that, he admitted, takes money.
Groves, who has stood before the council on previous occasions to explain how his firm, Alpha Engineering, came up with proposed rates, said communities need to invest in their power systems to provide service to existing customers and to be ready when large users, especially industries, expand.
"To keep the community healthy and strong and have the potential for growth, we have to maintain you facility," Groves added.
Questions by Randy Cole about how the electric utility has prioritized its spending over the past several years drew applause. Cole asked about the money the utility spent purchasing and renovating the former Fifth Third Bank building at 601 Main St.
Instead of trying to extract another $1 million from the community, Cole said, the department should have used its money to better its system of delivering power.
"If I have 60-year-old equipment, I would take care of that before I took care of the new office building," Cole said in response to statements by Smethurst that some utility substation components are more than 50 years old.
Smethurst countered those words by saying the utility was out of room in City Hall, its home for decades, and saved money by buying and improving the vacant building instead of building a brand-new office.
Office Manager Marcia Parker, echoing comments made last month, outlined the department's need to have reserves set aside for possible annexation or major disruptions caused by storms. The utility has to be able to serve its customers and the community, now and in the future, she said.
Comments on the utility's Main Street office stirred Councilwoman Dianne Rudolph, who said it was wrong to deny the electric utility funds it needs because of resentment over its purchase of the bank building.
A dentist, Rudolph compared the situation to her purchase several years ago of the former city police station on Ninth Street and the improvements she made to transform it into her dental office.
When the city put the building up for sale, the only interest was from real estate speculators who wanted to convert it into apartments. She didn't want that to happen, Rudolph said, and since she had saved her resources, was able to pay for the needed renovation.
By her work, she said, "I gained something. The city gained something, too."
It was no different with the electric department's decision to move locations, she said.
Several audience members pointed out the impact of rate hikes on people on fixed incomes and others asked the utility to phase in any increases.
Yackle voiced support for postponing any adoption of the ordinance until the April meeting, giving the council time to listen to more comments and for the public to read the utility's response in today's News.
Councilman Tony Hollinden returned to a proposal made last month by Little to give the utility 50 percent of its proposed increase. That motion, which failed last month, was "a compromise," Hollinden said.
It fared well, garnering all four council members' support. It will be considered for adoption in April with the first proposal of a 60-percent-40-percent phase-in of higher rates.
Smethurst has offered to share specific information on rate increases with residents and businesses who want to know how their average monthly bills would increase under the proposed changes.