Mayor: Rate increases seem likely as rising utility costs, aging power substations pose problems for city

City Council met Wednesday morning to discuss growing concerns about stagnant utility rates losing the city money.

The city tentatively budgeted $28.7 million for utilities during fiscal year 2016-17 with no working capital.

“At this point our utility cost is a growing concern,” Financial Director Shirley Hughes said. “We are looking at a $4.8 million deficit by 2018 and that includes our capital improvement fund.”

The capital improvement fund is money allocated toward improvements or repairs to the city’s infrastructure.

Last month, EES Consulting, a Seattle, Washington-based management consulting firm that provides an array of economic, engineering and environmental services, conducted a study on the city’s utility rates and the company concluded that the city could not minimize the deficit without raising cost.

Despite the council’s aversion to rate increases, the prospect of residents paying more seems likely.

“It would be very difficult not to raise rates at this point,” Mayor Rod Woodbury said. “We can make adjustments as to how much we increase rates at one time, but residents will probably have to pay in one way or another.”

Hughes said the city could possibly keep rates the same for one more year but the city would struggle to keep the utility fund self-sustaining for more than that.

“The fund has to sustain itself or we would have to use money from the general fund,” Hughes said. She was unable to state with certainty that rates would rise.

Water and electricity are the biggest utility expenses. Water utilities have put the city in a $3 million hole while electricity creates enough revenue to cover operation, but not improvement or repair expenses.

“The electrical fund covers operating, but when you add all the capital needs it goes upside down,” Woodbury said.

According to Electric Utility Administrator Rory Dwyer, capital projects on the city’s power grid are of critical importance.

“Some of our substations are 59 years old and they are just not viable power sources,” Dwyer said. A lot of these stations are close to schools and ball parks. They are potentially a danger to the public.”

Councilman Duncan McCoy agreed that the city must improve its electrical infrastructure to prevent blackouts.

“Our substations need to be improved,” McCoy said. “We can’t have people without power for an extended period of time.”

The council will hold workshops to discuss utility rates until May 24, when it votes on the final budget.

Woodbury said the council and residents of Boulder City need to have a serious conversation about raising utility rates.

“I wish we could just sweep this under the carpet, but that is not the case this year,” Woodbury said. “You are going to be hearing more about this in the future and we will try our best to minimize the cost to citizens of Boulder City.” At the council’s regular meeting Tuesday night:

n The council accepted a $2,000 donation from the International Code Council to pay for toddler swim lessons.

n Council members voted unanimously to allow Boulder City Solar to build on city-owned land. The company plans to build a substation as well as place communication and metering equipment on the land.

n Students from Boulder City High School attended the meeting to get a feel for how their local government operates.

Contact reporter Max Lancaster@bouldercityreview.com or at 702-586-9401. Follow him on Twitter @MLancasterBCR.