MMU passes rate increases amid concerns

MARSHALL – It sounded like it was too late to try and stop the water and electric rate increases proposed by Marshall Municipal Utilities, local businesspeople said. But all the same, several representatives of Marshall industries voiced concerns about the growing costs of water and power during a public hearing Wednesday night.

While MMU staff and members of the MMU Commission discussed the businesses’ concerns, they also went on to approve rate increases for 2014 and 2015 after the hearing. Commissioners also authorized solicitation of bids for construction of a water main connecting to a new well field in Sandnes Township.

The pipeline project will be a major capital expense for MMU in 2014, and was one of the factors cited in proposed water rate increases. MMU General Manager Brad Roos said the development of a new water source was necessary to help take pressure off of Marshall’s two current well fields. Water levels in the Marshall aquifer south of town have fallen to the point where the Minnesota Department of Natural Resources has directed MMU to find an additional water source, he said. The aquifer is still producing water, but it has been affected by both pumping and drought and needs a chance to replenish.

“We’re a wet-industry community,” Roos said. If MMU were ever forced to close a well because of low water levels, it would hurt Marshall industry.

The proposed water rate increases MMU was considering would come in two phases, said rate analyst Keith Wilkins. An overall rate increase of 15 percent would be put in place in 2014, followed by an overall 8.5 percent increase in 2015. (Water rates have two components, a monthly base charge and a charge per hundred cubic feet of water used.) The overall effect of the two-phase increase would be the same as introducing a flat-rate increase over three years, Wilkins said.

A rate study conducted earlier this year also recommended electric rate increases for 2014. Roos said the biggest expense for MMU to provide electricity to customers was the cost of buying power from wholesale suppliers. He said supply costs were projected to increase until about 2016, when MMU’s contract with its most expensive power supplier ends. Once the utility turns to less-costly suppliers, rates should be more stable, he said.

Bill Reilly, vice president of procurement at the Schwan Food Co., said he had “extreme concerns” about the rate increases. The high cost of power and water, as well as the lack of certainty in MMU’s projections for future rate increases, were hurting Schwan’s ability to grow production in Marshall, he said. MMU’s rates were high compared to other markets in the U.S., he said.

Reilly’s cost concerns were echoed by Keith Burger of Turkey Valley Farms, and John Pollock, co-owner of Midwest Ag Supplements. Marshall Economic Development Authority Director Cal Brink said he was also concerned that high utility costs would keep Marshall from attracting new industries in the future.

Burger said he would like to see MMU meet with its industrial customers and try to find ways to reduce future electrical costs.

“Maybe we as a group can help Marshall,” Burger said.

Burger said it was probably too late to change this year’s proposed rate increases.

Without the revenue increase of new rates in 2014 and 2015, Roos said, the Sandnes well field project – and in turn, industrial water supplies – would be in jeopardy.

In separate votes following the public hearing, MMU commissioners passed resolutions enacting electric and water rate increases for 2014 and 2015.