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Serving Northern St. Louis County, Minnesota

Council approves Ely utility rate hikes

Echo wins city legals with sleight-of-hand math

Keith Vandervort
Posted 2/4/20

ELY-  Council members here approved a 2020 water, sewer and electricity rate hike recommendation from the Ely Utilities Commission at their meeting on Tuesday night. Utility customers will be …

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Council approves Ely utility rate hikes

Echo wins city legals with sleight-of-hand math

Posted

ELY-  Council members here approved a 2020 water, sewer and electricity rate hike recommendation from the Ely Utilities Commission at their meeting on Tuesday night. Utility customers will be able to sound off on the increases at a public hearing scheduled for 5 p.m. on Tuesday, Feb. 18.
EUC customers will be charged a 50-cent increase in the monthly fixed fee for water service, and a one-dollar increase in the monthly fixed fee for sewer service in the coming year. In addition, electricity usage rates will increase by one percent.
In a memo to the council, Clerk-Treasurer Harold Langowski said the commission continues to ensure that operating fund balances are sufficient to avoid the need to make major rate increases. “We look at the long term rather than year-to-year,” he said.
“Our intent for each enterprise fund is to be at a break-even position, not including depreciation, so that we can be assured reserves are available in the case of unexpected expenditures,” Langowski said. “In addition, a break-even outcome allows the EUC to receive the best possible bond market rates when it comes time to accomplish larger projects that require long-term debt service.”
For the water utility, a one dollar fixed fee increase last year allowed the cash balance to remain steady, according to Langowski. “However, looking ahead to 2020, we plan to complete required maintenance to the water tower and are forecasting increases in fixed and variable costs,” he said. “These costs leave the fund about $20,000 short of breaking even in 2020. The recommendation is the fixed fee rate be increased by 50 cents to recover most of the deficit.” The fixed fee for water will increase from $15.25 to $15.75 per month.
Likewise, the sewer utility will see a fixed fee increase from $15.20 to $16.20 per month. That rate was not adjusted in 2019. “Throughout the year, we developed and implemented a mercury minimization plan (MMP), as required by the Minnesota Pollution Control Agency, designed to meet our mercury permit discharge limit that requires the execution of a pilot plant at the Waste Water Treatment Plant,” Langowski said. “We were looking at being about $35,000 short of breaking even in 2020, so we recommend the one-dollar fixed fee increase to recover most of that deficit.”
For the electric utility, the one-percent increase recommendation is mainly due to the debt service on a meter replacement project. “Looking ahead to 2020, we will have an increase in purchased power from our provider, Minnesota Power, by just over one percent,” he said. “Our proposed increase is less than what we’re seeing in our wholesale price increase.”
According to estimates provided by the EUC, the typical utility bill for a small home during the summer will see an increase from $101.14 in 2016 to $118.74 per month this year, and a winter increase from $139.56 to $160.67 per month, with the proposed 2020 rate increases.

Legal newspaper
Council members designated the Ely Echo as the city’s legal newspaper for 2020. As required by the city’s charter, the council must award the contract to the lowest responsible bid received.
The Ely Timberjay submitted a rate of $0.1609 per lower case alphabet for legal advertising, which was less than the Echo’s bid of $0.1826 per lower case alphabet.
The Ely Timberjay’s bid for display advertising was also substantially lower, at $2.65 per column inch, than the $3.88 per column inch submitted by the Echo.
But the Echo’s bid misstated the actual cost of its quoted rates to make them appear substantially less expensive than reality.
The city had requested the cost of a three column-inch display ad, for example. Based on the Timberjay’s quoted display rate, the cost of the ad would have been $7.95, which is determined by multiplying the three column inches by the $2.65 per column inch quote.
But when calculating their own cost, the Echo multiplied its $3.88 column inch rate by just 1.5 column inches, not the three column inches for the full ad, to reach their sample quote of $5.82.
“For years, we’ve seen these kinds of discrepancies from the Echo when it comes to bidding on city legals,” said Timberjay publisher Marshall Helmberger on Wednesday. “This is exactly why we stopped bidding on the city’s publishing in the past.” Helmberger had explained the Echo’s sleight of hand to Langowski last week, so the issue was not unfamiliar to city officials.
Council member Paul Kess asked about the disparity. “The Timberjay was clearly the low bidder for the legal print ads, but the Echo was lower in the sample ads,” he said.
But at least some on the council seemed willing to overlook the clear discrepancy.
“It looks like the Ely Echo has the lowest bid, correct?” asked council member Jerome Debeltz in making a motion to accept the lowest bid. “That’s my motion, then.”
 “Our requirement is to choose the lowest responsible bidder,” said City Attorney Kelly Klun. “Relative to pricing, I would assume that when it comes to what an exact ad or what the minutes would cost, we would lean toward the actual cost when comparing apples to apples. I’m sure an argument could be made that the lower case alphabet is another form of measurement, but when you think of cost and compare the two samples, it appears the Echo is the lowest responsible bidder.”
Mayor Chuck Novak noted the disparity in the rates received last year from the two newspapers. In 2019, the Timberjay submitted a bid that was approximately half the bid submitted by the Echo. Despite adamant pushback from the Echo, the council ultimately took the lowest bid, saving taxpayers thousands of dollars for legal publishing in 2019. “We are still in a lot better shape (in the cost to taxpayers) than prior to last year,” Novak said.

Other business
In other action, the council:
Agreed to delay a change in city ordinance language to increase the legal tobacco purchase age to 21 until the federal and swtate mandates are in effect.
Approved the staff and council to attend the 2020 Legislative Conference in St. Paul, March 18-19.
Scheduled the Local Board of Appeal and Equalization meeting for 5 p.m. Thursday, on April 16.
Approved a recommendation from the Sanitation Committee to set meeting times for the 4:30 p.m. on the fourth Wednesday of each month.
Approved a temporary liquor license for consumption and display for the Ely Folk School on Wednesday, Feb. 12.

Ely council

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