KAYSVILLE — Power rates may rise 9.65 percent in Kaysville if the city council adopts a recommendation by city staff presented Sept. 18.
The rate increase breaks down to include a 4.03 percent increase in operating costs, a 3.41 percent increase to rebuild cash reserves, and a 2.21 percent increase to raise money that will be transferred to the city’s general fund.
A public hearing on the proposed increase has been scheduled for 6 p.m. on Tuesday, Oct. 2, in council chambers at 23 E. Center.
The last rate increase adopted by the city was in 2007, according to Dean Storey, city finance director, who spoke with the Clipper on Wednesday.
In 2007, annual resource costs were at $7.5 million, he said, and costs are now at $9 million. The city purchases its power from Utah Associated Municipal Power Systems (UAMPS), which also serves Logan, Brigham City and other municipalities.
In Tuesday’s discussion, council members defended the need for the increase, pointing out that the utility fund had been operating at an average annual loss of $482,390 for the past five years.
Rate increases should have been going up all along, said Brett Garlick, a member of the council. Because the rates stayed the same, the city had to borrow from the reserve fund, which now needs to be rebuilt, he said.
The council passed a resolution in February of this year, requiring the city to hold the equivalent of 90-days of operating costs in reserve in case of emergencies.
It also recommended a reserve fund large enough to help stabilize rates as costs fluctuate, with additional funds held in contingency in case part of the system were to fail.
The rate increase will restore the reserve to the level required by the resolution in three to five years, according to Storey.
Land purchased for economic development purposes has drawn $500,000 from the reserve fund annually, but that amount will be repaid when the land is sold, according to council members.
“The city purchased 15 acres on 200 North and Flint Street,” said Storey Wednesday.
For more information check out the Sept.20 edition of Davis Clipper.