City council to consider raising utility rates

The Morgan City Council will consider proposals Tuesday to raise the city’s utility rates, a measure that city officials say is necessary for city revenues to keep up with rising expenses.

City leaders are proposing to raise electricity, water, sewer and natural gas service rates so the average residential customer might see up to a roughly $23 per month total increase in their utility bills, Mayor Frank “Boo” Grizzaffi said.

The city council will have ordinances on the Tuesday council meeting agenda to raise electricity, water and natural gas rates. Those ordinances will go through public hearings and then be up for adoption. The meeting starts at 6 p.m. at the City Court Building.

As originally introduced at a Dec. 19 council meeting, the proposed water and gas rate ordinances showed a gradual rate increase over the next three years. But officials plan to amend the proposed ordinances to just increase rates one time, Grizzaffi said.

Rate increases, if passed, would go into effect March 1, and the ordinances would allow the city the option to adjust rates annually.

The proposed individual rate increases are $7.50 per 1,000 kilowatts of electricity, $1.79 per 16 cubic feet of natural gas and $7 per 10 cubic feet for both water and sewer.

If the increase to water rates passes, then sewer rates will automatically increase because a city ordinance already states that the sewer rate is 100 percent of the water rate, Grizzaffi said.

The city also receives solid waste tax revenues from the parish to offset some sewer department expenses.

The rate adjustments will allow the utility department to basically break even on revenues and expenses because utility funds subsidize other city departments, and regulatory costs have also risen, the mayor said.

“When we get to a point where each segment of our utilities can’t even operate on its own, much less transfer out to support other things, you have to act,” he said.

Morgan City government’s utility fund balance was at one time above $40 million and is now below $17 million, the mayor said.

“If we continue at this current pace, there won’t be enough fund balance on the utilities side to transfer,” Grizzaffi said.

Over the years, city officials have used the city utility funds to subsidize other sections of city government including the police department, fire department, recreation department and library, Grizzaffi said.

Transferring utility funds to support these four areas within the government is necessary because the city doesn’t have dedicated taxes to support those areas of city government, he said. The police department does get roughly $500,000 a year through a St. Mary Parish law enforcement tax to support some of its $3.2 million annual budget.

Without any rate increases, city officials expected all of the city’s utility funds to have substantially more expenses than revenues in 2018.

The potential budget deficits in each department included $1.23 million in the electricity department, $455,000 in the water department, $359,000 in the sewer department, and $121,000 in the gas department, Grizzaffi said.

Those departments are supposed to “at least make enough to operate the department and maintain your infrastructure,” he said.