Provo residents facing utility rate increase

PROVO — Three months into his administration, Mayor John Curtis is undertaking the task of selling residents on the city's first power rate increase in 22 years.

Curtis ran as a fiscal conservative, but he said increasing costs and needed infrastructure improvements make utility rate increases for power, water and sewer services inevitable.

"It's a hard decision to be the mayor who stands up and says, 'I know it's been 22 years but we are raising power rates,'" Curtis said. "I don't mind making hard decisions. That's what I was elected for. The process we will follow will be open and transparent. We will go above and beyond what is legally required."

That means in addition to the legally mandated public hearing on May 18, the city will hold three public meetings over the next few weeks, the first on Tuesday, April 13, at 8 p.m. at Lakeview Elementary, 2899 W. 1390 North.

Other meetings will be April 27 at 7 p.m. in the Municipal Council Chambers, 351 W. Center, and April 29 at 7 p.m. at Edgemont Elementary, 566 E. 3650 North.

The rate increases are scheduled to go into effect in July, with the start of the new fiscal year.

The good news, Curtis said, is that he intends to submit a lean budget that won't call for increases in property taxes, even though the city expects revenues will be down $5 million.

"We've had the time to go in and surgically remove the things that should not be in our budget. I don't need a tax increase," he said.

The amount of the utility rate increases haven't been determined, but will be by the May 18 public hearing.

Curtis said the power rate increase is the most dramatic and most controversial because it will have the largest impact.

"We originally proposed a 9 percent increase, but we are starting to see that 9 percent may not be adequate," he said.

A 9 percent increase would have raised the monthly customer charge to $5 from $3, and the usage rate to 7.35 cents from 7 cents per kilowatt hour. Figures aren't final, but most homes will see a monthly increase somewhere between $3 and $5 if the rate increase is approved.

Provo is expecting its own rate increases from the Utah Municipal Power Agency, which sells electricity to the city. Increases in power costs coupled with a decrease in demand has depleted UMPA's stabilization fund, which was used to keep rates constant.

At the same time, the city must pay for infrastructure improvements. If rates aren't increased now, the city energy department's cash reserves, maintained for emergencies, will be gone by next year and the department will be $20 million in the red by 2014.

Business consultant David A. Berg told the City Council at a presentation last month that cutting costs in the energy department couldn't make up for the rate increases because 70 percent of its budget is used to purchase power.

"If you fired everybody, sold every truck, sold every computer, you might be there, because that's probably about 20 percent of total expenses," Berg said.

e-mail: mhaddock@desnews.com