ELY – The city council here Tuesday approved a seven-percent rate hike for electric service as recommended by the Ely Utility Commission. Local utility customers will see the increase in their utility bills later this spring.
At a public hearing prior to the council meeting, Clerk-Treasurer Harold Langowski said the rate hike within the electric utility fund is necessary to keep pace with a wholesale rate increase from the city’s electric provider, Minnesota Power.
“In response to that we raised our classifications the same seven percent,” he said. Langowski serves on the UEC’s budget and rate committee.
The electric rate for off-peak customers will remain unchanged this year. Water and sewer rates across the board also will remain unchanged.
In 2020, usage rates for electricity were increased by one percent across all categories.
“In late 2020, we received notice from Minnesota Power that our purchased power would be increased by seven percent,” Langowski said. “Our current contract expires at the end of 2024 with a three-year lead time notice to inform them of EUC’s intent to either automatically renew or explore other options.”
In preparation for upcoming power provider contract decisions, EUC recently joined the Northeast Minnesota Municipal Power Agency to partner with other local municipalities to negotiate fair market wholesale rates across the Iron Range, according to Langowski.
Electric bill examples provided by the EUC at the public hearing indicated that a small home in Ely would see a monthly electricity cost in the summer of $42.77 in 2021, compared to $40.20 in 2020. On the winter bill, a monthly electricity cost in 2021 is estimated at $87.04, compared to $81 in 2020.
In another example, for a family of five, the summer electricity cost in 2021 could be $98.10, compared to a 2020 cost of $91.20. The winter electricity cost in 2021 could be $184.47, compared to the winter cost of $170.80 in 2020.
EUC budget and rate committee member Rob Wilmunen added that if 2020 had been a normal year (non-COVID), the rate committee would have been looking at increases to the water and sewer rates because of decreased usage.
“We had quite a few months where restaurants and motels didn’t use nearly as much water as they would have in a normal year,” he said. “We are taking a pause to see if flows and volumes rebound back and our budget comes back. A seven-percent increase in the electric (rate) is significant, but we can’t afford to take the losses in the water and sewer, like we had in 2020, two years in a row.”
Wilmunen noted that maintaining healthy utility rates in the city is “attractive” for future bonding and CDBG funding.
Langowski said the Municipal Power Agency is hoping to see future rate savings from Minnesota Power.
“If we don’t see any significant savings, we may go out on the market and look for other providers to purchase wholesale power,” he said. “They know the seven percent stings. Nobody is happy with it. There should have been a way to reduce the impact on customers. Maybe (Minnesota Power) will come back in a couple of months with different rates. Time will tell.”
The lone Ely resident who attended the public hearing inquired if the electric power rate increase was due to “the drive for the new Green Deal” and efforts to utilize more renewable power sources.
Langowski surprised everyone in the council chambers when he said “tax credits with some renewable energy projects actually reduced the city’s electric rate for a while.” He added that market conditions affect rates.
“Our contract with Minnesota Power guarantees their rate of return on investment,” he said. “Ely, as a municipal utility, has no guaranteed rate of return. That has been a touchy subject for many years.”
Library reopening
The Ely Public Library is considering re-opening plans, but don’t expect anything to change until at least May. The library, like all city buildings, has been closed for the past year due to COVID-19 public health concerns. The city remains under the emergency rule that can only be lifted by council action.
Library Director Rachael Heinrich said the library board held a lengthy discussion last month on reopening the facility.
“There was not a consensus on the library board, from my point of view, on what route they want to take,” she said. “The council would need to lift the emergency order as a first step. It certainly depends on the COVID situation.”
Mayor Chuck Novak indicated that the lifting of the city’s emergency order, and approval of a library reopening plan, could likely happen at the second council meeting next month).
Other business
In other business, the council:
• Approved the recommendation from the Heritage Preservation Commission to submit two grant requests of $177,350 each to replace the Pioneer Mine retaining wall.
• Approved a recommendation from the Park and Rec Board to accept rentals requests at the Rec Center, Semer’s Park and Whiteside Park, following updated COVID safety guidelines.
• Approved moving forward with a private developer to develop a housing project by the Trezona Trail and Miners Lake.
• Accepted the resignation of John Zobitz as First Assistant Chief for the Ely Fire Department, and Ely Police Chief Chad Houde as firefighter, and allowed Ely police officer Christian Deinhammer to join the EFD pending pre-employment requirements.
• Approved a memorandum of understanding with Morse Township concerning a land swap.
• Approved a contract for construction services with Pathfinder Trailbuilding at Hidden Valley for mountain bike trails.