KAYSVILLE — In a public hearing Tuesday night regarding a proposed 9.65 percent electric rate increase, many citizens approached the city council with three recurring concerns.
Residents voiced opposition to using electric reserves to fund police officers, disagreed with the city’s practice of using electric funds for economic development, and expressed personal finance concerns over an increased electric bill.
During the one-hour hearing, city leaders emphasized to the approximately 30 people in attendance that the need for the increase — scheduled to take effect Nov. 1 — is well-documented.
Officials said that, even with the proposed increase, Kaysville residents will still pay less for electricity than Rocky Mountain Power customers.
“The scenarios that we have run show that Kaysville is roughly 9 to 16 percent lower than Rocky Mountain Power,” Mayor Steve Hiatt said.
He stressed that electric rates vary from one customer to another, depending on usage.
“For example, I am a high-usage customer and am only about 10 percent lower than Rocky Mountain. (City Manager John) Thacker is a low- usage customer, and was about 16 percent lower than Rocky Mountain Power,” Hiatt said.
Hiatt also referenced a report indicating Rocky Mountain Power will raise its rates by 5.64 percent in October, which will widen the rate gap further.
Finance Director Dean Storey explained that the analysis comparing Kaysville electric rates and Rocky Mountain Power rates is complicated.
“Their rate structure is quite different than ours. They have a seasonal rate. So they charge a flat rate during the winter months, and during the summer months they charge an escalated rate. Our rate is … a flat rate year-round,” Storey said.
Storey said he is willing to run a personal analysis for any resident who wants to know how the increase will effect their electric bill.
He said his bill will increase by about $100 each year, Thacker will pay about $64 more per year, and Hiatt will pay about $400 more per year.
Storey said he thinks the average increase will be about $200 per year, but emphasized that bills will vary based largely on usage.
Several residents voiced concerns over paying a higher electric bill with limited or fixed incomes.
Many were also concerned with the city’s decision to fund new police officers with electric funds, saying police should instead be funded with a property tax increase.
Residents also opposed the city’s practice of using electric funds to finance economic development.
A particular issue is a property at the corner of 200 North and Flint Street that the city purchased in 2006 for $3.9 million with electric reserve funds. The land is intended to eventually be sold for economic development purposes.
The city counts this land as an asset and will make the last payment on the property July 31, 2016, Storey said.
City officials repeatedly stressed that when the Flint property is sold, the resulting cash will be returned to the electric reserve fund.
Some residents attributed the need for a rate increase to the purchase of this property.
However, officials say the Flint property is just a small piece of the puzzle, stating that the rate increase is needed to cover a deficit in operating costs, to pay for three new police officers, and to replenish their 90-day cash reserve fund.
Thacker said the power company has been working with an operating loss for the past five years, meaning they have been paying more for electricity than they have been charging Kaysville residents.
“No part of the operating costs is the fact that we do use cash reserves … for economic development dollars, and for any interest expenses associated with that,” Councilman Gil Miller said at a previous council meeting.
“We may have a theoretical argument forever as to whether or not excess power funds in the cash reserve should ever be used for economic development.”
Thacker said that with the proposed rate increase, the city expects to reach 90 days of operating cash reserves within about 2 ½ years.
The council plans to vote on the increase at the next council meeting Oct. 16.