Detroit Lakes, Minn. (KDLM) – Electric and water utilities rates will be going up Jan. 1 for all Detroit Lakes Public Utilities customers after the city council approved the rates for the new year at their meeting on Nov. 14.
On Jan. 1, 2024, Detroit Lakes Public Utility customers will see a 12% increase in water charges next year, which comes out to about an additional $2.75 per month, based upon water usage. Electric rates will be increasing 5% next year, which totals about $3.80 more per month on customer’s utility bills.
Vernell Roberts, general manager of Detroit Lakes Public Utilities, explained to city council members how the city’s public utilities uses outside organizations, like Missouri River Energy Services, to help calculate to conduct their rate studies. Adding, power generation and distribution costs are constantly changing with energy prices, but the rates need to be locked down once per year for customers in an industry that can be fluid with revenues and expenses.
“The Public Utilities Commission has been very comfortable with the information Missouri River (Energy) provides,” said Roberts. “We call them up, they plug that into the model and they tell us what we need to do to our rates to make sure we get cost recovery on the purchase power increase … if anything changes in our capital plan, we submit that to them and they make those changes. When we updated our capital improvement plan, approved in September, we took those updated costs for 2027, plugged that into the great model for the water fund and generated a proposed rate for 2024 and going forward. So, it’s a living breathing document and we use them a lot … we’re very accurate in our record keeping … we plug those into the model and it spits out a pretty accurate rate for what we should be charging each of our customers in each one of our funds.”
The main reason for the increase in water rates is to account for upcoming infrastructure projects, like the city’s new water tower, and to keep a strong water fund balance to ensure the city’s new special assessment policy will have enough funding going forward.
The city of Detroit Lakes adjusted the special assessment policy so homeowners would not have to bare costs of replacing the water mains on street and utility reconstruction projects, an item that had been assessable in the past.
“Fifty percent, or six percent of that twelve percent, is being allocated to the replacement costs of reconstruction projects,” said Roberts. “We are going to take those assessment costs from reconstruction projects take them out of the assessments and put them in the rate base. That’s reconstruct projects only, not new construction, reconstruction projects only. So, 6% of that 12% is due to capital needs going forward for replacement of reconstruct projects.”
Roberts said he also expects additional increases in the water rate in 2025 and 2026 as well so the city can prepare for additional water infrastructure.
“We will also take a look at this again in 2025,” he said. “Right now, we’re anticipating a 12% increase for 2025 and 2026 as well. Because we’ve got to find a way to fund Jon (Pratt’s) $8.355 million water tower. That’s something the community really needs. We need that additional capacity. We need a little bit of additional pressure. We’ve been kind of putting this off for the last couple of years … and the timing is right to make the move and get that tower going and start construction. Hopefully, we’ll have that in service in late 2025 or early 2026.”
Roberts also said the increase on residential and commercial electric customers will vary depending upon usage.
“An average residential customer with a 5% rate increase will see $3.80 per month,” said Roberts. “An average residential customer uses about 800 KWH per month. If you use more than that, you are probably going to see more than that $3.80, if you use less than that, it’s going to be less than that … Commercial customers vary because of the demand charges, what their load factor is, there’s just a lot of different variables in commercial accounts to determine what that rate increase would actually be and how it would affect them.”
The Detroit Lakes Public Utilities Commission also provided comparison charts for electric and water rates compared to other utility providers in the lakes area.
2024 Detroit Lakes Public Utilities rate comparison charts by Michael Achterling on Scribd
The proposed 2024 monthly electric bill for a Detroit Lakes customer will be $101.80, based on 800 KWH of usage, which is about $17 cheaper than the monthly electric bill from Lake Region Co-op and Minnesota Power and about $36 cheaper per month than Xcel Energy and Wild Rice Co-op.
The proposed 2024 monthly water bill for a Detroit Lakes customer will be $28.16, based on 3,140 gallons of usage, which is $2 cheaper than the median water bill for the lakes area and about $17 per month cheaper than water customers in Thief River Falls and Marshall, Minn.
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