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Unalaska City Council Grapples With Utility Rate Increases

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Berett Wilber/KUCB
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The Unalaska City Council still hasn't decided whether to increase utility rates. That's despite several meetings and many hours of discussion and presentations on the challenges of rising costs and the question over who should pay.

At a special meeting Monday, the Unalaska City Council voted down a resolution that would've raised utility rates for residential, commercial and industry customers. The council voted 2-3 to reject a one-time hike to electricity rates of 6.1% and water rates of 3.6%. But the biggest increases, both of which would have taken place over a four-year period, would've been 40% for wastewater and solid waste rates by 33%.

The city increased utility rates in 2012, which officials said did little to make up for budget shortfalls that came after upgrading the city's water and wastewater plants in 2015. 

In 2016, they were raised again after a rate study indicated a need for increases to be made to the wastewater and solid waste proprietary funds. While supplemental money was taken from the city's 1% special revenue fund, which pushed back rate increases, officials said things like increased costs of chemicals and labor as well as inflation have caused a need for extreme utility rate increases. 

At the meeting, councilors considered two options for increasing wastewater rates: increase rates for all customer classes evenly or increase industrial rates at a higher rate than everyone else. The plan cited an increase of  80% for industry and minor increases for the remaining classes as an example.

Unalaska City Councilman David Gregory suggested amending the resolution to include the latter plan and increase industry rates at 80%, but it was voted down by council. He was among the majority that voted against the main resolution, which included the even increase of wastewater rates. He said industrial users rather than resident customers should pay more. 

"Rather than putting the burden on our residential customers, I would think that the cost causer should be the cost payer," Gregory said. 

Residents are currently paying about $2.50 per 1,000 gallons for wastewater, while industrial customers are paying only $1.13 per 1,000 gallons. Part of the reason for that, Director of Public Utilities Dan Winters said, is they treat their own wastewater, which doesn't pass through the city's water treatment plant. 

Industrial wastewater rates are also estimated and based on the amount of water they use, which Winters said is 6 million gallons per month. 

However, he said it's true that the industry is not paying its fair share.

"The residential and commercial [customers] have been burdened with that for some time," Winters said. "But we've kept that the way it is, as far as the rates go, because we actually sell more water that way, which keeps our rates lower." 

He recommended evenly increasing rates for all customers, from unmetered residential to metered industrial users, such as fish processors. If the city hikes industrial wastewater rates, he said some plants could disconnect from city water which would increase costs for all. 

"If the increase in the charges of their wastewater equals the amount of the cost of the equipment to make [their own] water, they will buy that equipment," Winters said. "And then you will not see that water being used from the [city's] water plant."

Council members Shari Coleman and Alejandro "Bong" Tungul both voted against the amendment that would increase industrial rates more than residential and commercial. And they were the only two members to vote for increased utility rates across the board.

Coleman said industrial wastewater isn't metered. So she's not comfortable with charging them more. 

"There's some speculations and assumptions made," she said. "I just really don't want to put that burden on that group with a certain amount of unknown." 

Ultimately, the resolution failed on a 2-3 vote. It will be revised and brought back to council at a special meeting on May 10.

At its special meeting, the council also approved the city's 10-year Capital and Major Maintenance Plan on a 4-1 vote.

 

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