PORT ANGELES — The City Council has begun discussing possible utility rate hikes in 2015.
Council members are re-evaluating how different classes of city customers pay their share of utility bills.
During a work session Tuesday, Angie Sanchez Virnoche of Seattle-based FCS Group presented on an updated cost-of-service analysis her firm had done for each of the city’s utilities.
The analysis presented several reasons for rate increases.
Among them: investment in improving utility infrastructure, rising electricity costs and the large-scale environmental projects the city is facing.
The city could have to shell out between $57.5 million and $65.2 million over the next 20 years to deal with environmental issues.
These include multimillion-dollar efforts to reduce sewage flows into Port Angeles and keep the city’s shuttered landfill from releasing garbage into the Strait of Juan de Fuca.
Residential, commercial
The study focused on examining how the cost of operating each of the city utilities is divided among different utility rate classes, the main ones being commercial and residential.
Residential customers now pay more than the true cost of what it takes to provide water and wastewater to residents, FCS Group said, while commercial customers are paying less than it takes to provides them with water and wastewater.
The opposite is roughly true for residential and commercial electric customers, according to the analysis.
“If one customer class is going to subsidize another class, there really needs to be a reason,” City Manager Dan McKeen said, explaining the need for regular re-evaluations of how much different rate classes pay.
Sanchez Virnoche said that based on her firm’s research, other utilities generally have commercial rate subsidizing residential rates, though it varies for each community.
The analysis presented two proposed methods for raising rates:
■ Achieving the true cost of service for each utility rate class, which would mean drastic increases for whichever class was not paying its cost of service.
■ A “phased-in” approach that would spread the increase more evenly across the rate classes.
Possible “phased-in” rate increases presented were, for average monthly bills:
■ Electric — From $104.39 to $113.49 for residential, an 8.71 percent increase, and increases ranging between 6.6 percent and 2.37 percent for most commercial accounts.
■ Water — From $38.08 to $39.38 for residential, a 3.41 percent increase, and from $53.41 to $57.65 for commercial, a 7.94 percent increase.
■ Wastewater — From $46.70 to $51.35 for residential, a 9.96 percent increase, and from $41.81 to $47.61 for commercial, a 13.87 percent increase.
Per-ton tipping fees for the Port Angeles Regional Transfer Station for self-hauled waste were proposed to rise from $170.11 to $189.22, an 11.23 percent increase.
At the work session, City Councilman Brad Collins said he wanted to see an approach that balances the phase-in rates with the true cost-of-service amounts to lessen the impact on residential customers.
“I think it’s deeply onerous to raise residential rates when they cannot afford it,” Collins said.
Councilman Dan Gase said he generally agreed with Collins, though he advised caution in raising rates too much for businesses.
‘Treading on thin ice’
“I think we’re treading on thin ice here, and we have to be very, very careful making huge adjustments to segments trying to create the jobs and have long-term positive effects on our community,” Gase said.
Councilman Lee Whetham said he thought council members should postpone reinvesting in utility infrastructure to reduce project rate increases.
“I don’t see how we’re going to do everything,” he said.
“There’s not enough money.”
Councilwoman Sissi Bruch said she would support keeping the proposed reinvestment schedule and balancing the phased-in rate approach with adjusting rates to show the true cost of operation.
She said she did not want to delay reinvestment for fear of saddling future city councils with the need to undertake costly capital projects all at once.
“Even if it’s 5 cents, I want us to move forward with reinvestment,” Bruch said.
Mayor Dan Di Guilio supported finding a balance, adding, “I kind of tend to agree with [Bruch] in the sense that you either pay now or pay later.”
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Reporter Jeremy Schwartz can be reached at 360-452-2345, ext. 5074, or at jschwartz@peninsuladailynews.com.