Grand Marais PUC considers raising electric rates

Grand Marais Administrator Mike Roth informed the Public Utility Board (PUC) that the city’s electrical generation provider Southern Minnesota Municipal Power Agency (SMMPA), had raised the city’s 2023 rate by 15 percent, a hike of about $180,000 over the current rates.

Roth suggested that the board raise the rates by 3 percent over 2022 for customers to combat that increase. That would net the city $80,000, and Roth said the fund balance could cover the 100,000 left.

Charles Hathaway, Grand Marais PUC commissioner, and Craig Schulte, the city’s representative on the PUC for the city council, were leery of raising rates at this time because of inflation. However, Roth said that next year the PUC would pay off two significant bonds, and in 2024, the PUC could look at lowering rates unless SMMPA again pushes prices higher, then the city will have to look at passing those charges to its customers or dip further into their fund balance.

When asked why the board should consider raising rates, Roth said the staffing budget for 2023 includes support for two-line workers, one apprentice line worker, 32 percent of the City Administrator, Finance Director, City Administrative Assistant, and Communications Coordinator. He said the electric fund also contributes to the sustainability coordinator position. Plus, Mike added that in 2019 electric sales were the same as in 2018, but during the COVID-19 pandemic, sales in 2020 were down 10 percent and flat for 2021. He added that sales are higher than in 2021 but not up to 2018 and 2019 levels.

The prosed 2023 budget is $3,313,733 up from the $2,896,915 budget of 2022. Two debt commitments, a 2012A Power Plant Refund Bond of $197,913 and a 2013B Reconstruction Refund Bond of $365,875, will end in 2023, and Roth said there are no current plans for additional debt-supported projects.

Because only two of the three PUC board members were at the meeting, Hathaway asked if the vote could be tabled until the next PUC meeting in November. Roth said that would be okay, but the PUC will have to decide whether to raise or keep the electric rates the same for the coming year.