Water, sewer rates to increase by 12 percent

By Chad Koenen

Publisher

Henning residents will notice several changes to their utility bills in the near future.

During a special city council meeting on Monday, Nov, 22, the Henning City Council heard from Evan Leebens, of Missouri River Energy Systems, about a utility rate study. The study looked at current utility rates, future projects and what utility rates would need to be in order to fund future projects.

The rate study looked at the city’s electric, water and sewer funds. The city also maintains a natural gas utility.

Leebens highlighted several findings from the study, including the potential addition of a large commercial rate for electricity. Leebens said that class would help to make sure people are being properly charged for their fair share of electricity. It was estimated the new large commercial rate would include 10 customers. 

The study found small electric rate increases will be necessary to recover additional debt service costs, along with increasing operating expenses through 2025. Rate increases would also fund planned capital expenditures, while increasing reserves up to the recommended minimum level by the end of 2024. Based on the study, MRES proposed a 3 percent electric rate increase in both 2022 and 2023. 

For a typical electric user in Henning, Leebens said that means approximately $2.40 per month increase in their electric bill in each of the next two years. Even with the increase, Henning will remain below a number of other area electric companies like Otter Tail Power and Lake Region Electric in an average monthly cost. 

With several upcoming water and sewer projects on tap, and due to the fact the city does not know if it will qualify for any grants to help fund the projects, MRES suggested a 12 percent increase in water rates in 2022 and a 10 percent increase in January 2023. Additional rate increases of around 7 percent may be needed in 2024, depending on the ability for Henning to receive grant funding for a portion of its 2022 project.

“With grant funding, we are projecting similar cash reserves, but lower or fewer total increases would be necessary,” said Leebens.

The study also suggested, which was later approved by the council, to no longer include 2,000 gallons of water as part of the base water rate. Instead, customers will be charged a base rate and for all of the water they use each month.

The proposal was to take the current base rate of $38 per month, which included the 2,000 gallons, and decrease the base rate to $32. Residents will then be charged for $5.41 for every thousand gallons they use. 

Henning Mayor Darren Wiese said that means a person using 2,000 gallons of water a month will see an increase of approximately $5 per month on their water bill. 

Leebens and city council member Tammy Fosse said individuals who use less than 2,000 gallons of water a month could actually see a slight decrease in their water bill by decreasing the base rate as proposed. 

When compared to other neighboring communities, Henning’s water rates were already higher than every community presented to the council as part of the study, with the exception of Ottertail. The study looked at a residential user utilizing 4,000 gallons of water per month. The proposed 12 percent increase, would result in a just over $7 increase per month. 

A residential user utilizing 4,000 gallons of water a month would see their bill go from $46.57 to $53.64 per month. That would be higher than Ottertail, Elbow Lake, Parkers Prairie, Battle Lake, Deer Creek, Staples, Wadena and Verndale. The median water bill for a 4,000 gallon residential user was just $39.53 per month, according to the MRES study. 

On the sewer side, Leebens noted the sewer fund has routinely lost money each year. 

Based on the findings of the rate study, MRES suggested a 12 percent increase in sewer rates in January 2022 and January 2023. Additional rate increases of 6 to 12 percent may be needed in 2024 and 2025, depending upon the ability for Henning to receive grant funding for a portion of its 2022 capital project. MRES is also suggested eliminating the 2,000 gallons included in the customer charge and charging for all wastewater usage through the variable rate. That would result in the base rate dropping from $35.75 today to $30 per month in 2022. However, the rate would go up essentially $7 per month for a person utilizing 2,000 gallons of sewer usage. 

When compared to other neighboring communities, Henning’s current and future rate for a residential user utilizing 4,000 gallons of water a month would go from $47.75 to $54.92 per month. Only NY Mills at $62.10 per month has a higher sewer rate. The median sewer bill in the region is $41 per month for a person utilizing 4,000 gallons. 

For an average residential user in Henning, residents will see an increase of $16.07 per month, or just under $193 per year, increase in their water, sewer and electric bill. That increase is on top of the increases the city already made in 2021. The Citizen’s Advocate sent multiple emails to the City of Henning for the total amount of increases in water, sewer and electric rates since 2020, but had yet to receive a response by the time of press. 

While the rate increases will help Henning’s bottom line, Wiese told the city council that he will still seek budget cuts from the city to avoid continued increases in utility rates. 

“The council needs to be forewarned I will ask for them again. In accepting this it doesn’t mean we just roll over and move forward with this because we are going to get close to exactly what was proposed before,” said Wiese. “If for some reason Willow Creek were to not stay (close to profitable) we will get close to that $200 per month by the end of ’26 if you look at how this is patterning out. And really if it is $150 that’s huge from 2019.”

The new water, sewer and electric rates were approved to go into effect in January 2022.