After months of haggling — and after another lengthy discussion about finances and philosophies about spending and saving — Iola City Council members agreed water and electric rates need to be hiked.
Council members on Monday approved unanimously a 3 percent increase in water rates.
A subsequent 3 percent increase in electric rates wasn’t unanimous — members Aaron Franklin and Bob Shaughnessy were opposed in the 6-2 vote — but passed nonetheless.
Both rate increases were necessary, City Administrator Carl Slaugh explained, to ensure their long-term solvency.
The water fund has been in dire straits for more than a decade, Slaugh noted, after the new water plant was built in 2005, without much of an increase in rates.
That meant the city had little added revenue to cover the $600,000-plus annual payments to retire the bonds issued to build the water plant.
Part of the rationale, Slaugh elaborated, was because the city had anticipated building the plant and selling its water to additional customers, either through population growth or from outlying water districts buying treated water from Iola.
“That did not materialize,” Slaugh said. “In fact, some of those factors worked against us. Our population has decreased.”
For a four-year period, from 2006 to 2010, the water fund operated in the red, Slaugh noted. (Differences were made up with transfers from Iola’s electric and gas reserves.)
Subsequent rate hikes for water helped the city stay afloat, but just barely.
But with the city still making bond payments for another nine years on the water plant, it’s growing increasingly difficult to make ends meet, Slaugh said.
In addition to the rate increase — which bumps up the cost of a single unit of water from $3.80 to about $3.92 — council members approved an energy cost adjustment, which will allow for “micro-adjustments” to water rates on a monthly basis, depending on the costs involved with treating water.
The city already has energy cost adjustments for its electric and natural gas bills, Slaugh noted.
The adjustments for water should be relatively stable, because commodity prices involved with water treatment rarely fluctuate.
Councilman Jon Wells encouraged the city — even after Monday’s actions — to consider smaller rate hikes on an annual basis.
ELECTRIC RATES also will increase, but like water, at a smaller level than Slaugh originally proposed.
