12.6.06

M.U.D. utility rates up despite objections
by Tim Elfrink, Omaha World-Herald

Metropolitan Utilities District customers will see their water and gas rates rise starting in January.

The M.U.D. board this morning unanimously approved a 5 percent increase in water rates and the equivalent of a 3.1 percent increase in gas rates.

The board heard several impassioned pleas against the rate increases during a public hearing, but members said they believed the increases were necessary to balance the utility's books.

"It's difficult to approve this cost increase, but if we didn't we would eventually have to. . . . make even larger rate increases down the road. I don't like it, but I don't know what other solution there is," said David Friend, a board member.

The water increase is necessary to pay for a water plant and wells that M.U.D. is building along the Douglas-Saunders County line, officials said.

The gas rate increase is needed to compensate for financial losses from a string of unusually warm winters.

The average residential customer will pay about $38 more a year on a gas and water bill of about $1,100.

Several speakers at the public hearing said the rate increases -- particularly the gas rate hike -- would hurt low-income customers.

"By adopting an across-the-board increase, that cost won't be borne equally among your customers in terms of hardships. To this board, $38 probably doesn't seem like a lot of money, but it is a lot for some," said Gary Fischer, general counsel for Family Housing Advisory Services.

The higher cost for a necessity, such as heat during the winter, would be hard to bear for families that already operate on a fixed income, another speaker said.

"The people on minimum wage who are already working hard just to get by are the ones whose heat you're going to be shutting off when they can't afford to pay for this," said Ernie Boykin, a resident of Meredith Manor Apartments in north Omaha.

But officials said the weather will have a larger impact on how many customers can't pay their bills than will the rate increase.

"I don't think you can say this increase will result in a higher number of people defaulting on payments, because we can't speculate on if it's going to be a warm or a cold winter. The weather plays such a large role in our gas bills," said Ron Bucher, M.U.D. senior vice president.

Unusually warm winters for seven years have cost M.U.D. about $25 million in net revenue, Bucher said.

Combined, the water and gas rate increases are expected to generate $9.3 million toward a projected $753.9 million budget for 2007.

The water increase applies to the rate customers pay for water use and will account for about $9 of the estimated $38 increase in the average customer's bill.

Gas rates will increase in two areas. A $10 monthly service fee will increase by $2, and M.U.D. will increase by 4 percent the charge

The 2007 budget M.U.D. passed today, which totals $753.9 million, is lower than the current $764.3 million budget.

That's because the district will spend less in 2007 on construction of the new plant and well field. The plant is to go online in 2008.

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