Seward council approves rate increase after failed electric utility sale

The city of Seward, seen from above (Sabine Poux/KDLL)

Seward households and businesses are going to see higher electric bills after the local City Council voted to raise the utility rate by six cents per kilowatt hour at its Dec. 18 meeting. For an average household in the city using 600 kilowatt-hours, residents could pay an extra $36 a month. Residents will be paying $0.1817 per kilowatt hour in the summer, and a lower rate of $0.1451 in the winter.

The rate increase follows two votes by locals in May and in October not to sell the city-run utility to a larger company over the last year. Although the city warned of increased rates if the sale didn’t go through, the votes never passed the 60% threshold to sell.

Rob Montgomery is the acting manager for the city’s electric utility. He said part of the increased revenue will go toward improving the city’s electric infrastructure. This includes a project replacing transmission lines — which the city took on $10 million in debt to work on — as well as refurbishing three substations that all have outdated equipment. The increase also accounts for inflation across the board.

“Much of this work has been deferred through the years for whatever reason,” he said. “And so now, the utility, we’re having to play catch-up on improving and maintaining the system.”

At the last city council meeting, many members of the public supported a lower rate proposed by an ad hoc committee. This meeting was no different, with many residents voicing concerns about the strain an increase would put on low-income households.

Seward resident Phil Kaluza, who supported an increase of two cents per kilowatt-hour, commented on the possible impact of the rate hike.

“I always look at who gets hurt from unnecessary rate increases, and it really is the low-income folks,” he said. “You know, those people that we called essential workers just a few years ago? They’re the ones in the wintertime that have the hardest time getting through a winter paying their heating bill as well as their electric.”

Council member Mike Calhoon initially moved to amend the resolution and lower the rate increase to three cents, which he also did in the November meeting. However, the council rejected the amendment, with only Calhoon and fellow member Kevin Finch supporting it.

Council member Randy Wells supported the resolution and moved to amend the resolution to include a program to keep costs low. However, he instead turned the amendment to a directive for the city’s administration to create a program adjusting rates for low-income individuals.

Wells said there would be less impact to the city’s utility revenue from a cost reduction program than the three-cent increase. He restated his desire to sell the utility, which would have given residents a lower rate increase.

“These aren’t new issues, and these are the most, some of the main issues why the council suggested and pushed so hard to sell this utility, and it’s extremely unfortunate,” he said.

The council ultimately approved the resolution with opposing votes from Calhoon and Finch.

In an interview after the meeting, Seward City Manager Kat Sorensen said she and other city staff have been looking into different options for a cost adjustment program to present to the council at their next meeting. The city is also finalizing budget billing for residents and businesses, which determines billing based on a monthly average usage from the previous 12 months.

“It would be a set amount of money that they pay at the end of every month, and then at the end of every 12 month period, we would recalculate that and manage it for the next year as well,” she said.

The rate increase will go in effect for 2024. The next city council meeting is on Jan. 8.

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