This blog reports events and interesting tidbits from Rensselaer, Indiana and the surrounding area.

Tuesday, December 13, 2016

City Council 12-12-16

I expected Monday's City Council meeting to be short and uneventful based on the short agenda, but my expectation was wrong. I arrived a few minutes after the start of the meeting and the item under discussion was an ordinance that was not on the agenda. It was to establish a special fund to deposit grant money coming from the state for road and bridge repairs. Apparently the state requires that the fund and grant money in the program must be deposited in 24 hours after the funds are received.

The Council next approved a long list of transfers that I did not understand. I think it is bookkeeping as the end of the year approaches.

The gas tracker for December will be a seven cents increase. That is an unusually large increase.

Then John Julien of Umbaugh Associates, the City's financial advisor, gave a presentation on the rate study he did for the electric department. He said that revenue growth has been slow and cost have been fairly steady, but that the utility was not financially prepared for the future. In 2013 it had cash reserves of $4.7 million and earlier this year it had cash reserves of $4.4 million. The utility needs to have a minimum of $3.4 million to meet borrowing commitments and thus it is not ready if a major disaster hit. The city should not, he said, wait to act until it gets into trouble.

The electric utility needs about $10.4 million in revenue each year for day-to-day operations. Most of that, about $7.5 million, is the cost of purchasing power. It needs about a million more for bond payments, both the interest and principal repayment. The City will soon be issuing new bonds to finance a substation on Bunkum Road, and that will be structured so its payments and the payments for the bonds issued in 2011 and 2112 will be about the same each year, or about a million dollars per year. Finally, he expects that capital improvements over the next ten years will total about $8.5 million. When all of these factors are put together, the utility needs revenue of $12.2 or $12.3 million each year but current rates are expected to raise revenue of about $11.5 million. The gap of $730K should, he suggested, be filled with a new rate structure. For residential consumers the increase will be 6% to 6.5%. A residential consumer who uses 700 KWHs per month will see his bill increase from about $79 to $84.

Rensselaer has about 40 large consumers of electricity. The twenty largest use electricity at a steady rate, but some of the other twenty have large variations in usage, and these variations or spikes cost the city more than the steady flow. He said that in fact the City was collecting less than the cost of serving these users and suggested a change in the way they are charged that will be gradually implemented to allow them to adjust.

The Council voted to proceed with this proposal. An ordinance will be introduced at the next meeting and a public hearing will be held in January.

In announcements, the Police Chief announced that the Board of Public Works had approved the  promotion of Sergeant Matthew A. Anderson to the title of Lieutenant. Tomorrow at 9:00 there will be a meeting at City Hall featuring Team (or Teen) Challenge about providing housing for addiction recovery. It is open to the public. The high water treatment plant is now 62.5% complete. (I wondered how they came up with that number but realized it is probably something that is related to how they bill for payment.). The high water treatment plant now has both gas and electricity connections.

Are you ready for the arctic blast we will be getting this week? Forecasts say it will be the coldest since early January 2016.

I do not have any interesting pictures this week so this picture that I took as I left the meeting of the almost-full moon over the Court House is the best I can do.

1 comment:

Grey Friar said...

Regarding the 7 cents increase in the price of natural gas. That does not surprise me. The long range forecast for this winter is for it to be colder than normal by 3-4 degrees and for there to be about 30% more snow. I recommend viewing meterologist Joe Bastardi's daily and weekly video weather blog at Joe's prediction for a colder and snowier winter, especially for the mid-west has been out since early October. He gives "the big picture" on weather and explains the research behind it.