Lansing Board of Water and Light weighs possible rate hikes

Jan 19, 2012

The Lansing Board of Water and Light will hold a public hearing tonight on rate hike proposals that would affect the utility's water and steam customers.

The Lansing Board of Water and Light public hearing begins at 5:30 p.m. in the utility's Haco Drive headquarters board room.

If approved, rates would go up 9%. Electricity rates would not be affected.

WKAR's Scott Pohl reports.

The Board of Water and Light would bring in an extra $3.3-million dollars annually if rate increases for steam and water customers are approved. Communications director Mark Nixon says steam and water are "loss leaders."

"They are not making money," Nixon states. "Electricity is the workhorse of the Lansing Board of Water and Light. This is where we get our money, but even after the rate increases are approved, if they are approved, we're still looking at losses on those particular utilities."

If approved, the bill of a residential water customer would go up a couple of dollars a month, to about $26.

The utility has about 200 steam customers, primarily downtown businesses and state of Michigan offices. Their bills would go up by an average of $116 a month, to about $1,500.

Nixon says the money is needed to repair and replace an aging infrastructure, pointing to the recent removal of a water main that was made out of wood.

"This is not uncommon, not unheard of in our utility as well as utilities all over the nation," Nixon says. "This is a 100 year old plus infrastructure. Of course there's some of it new, but when you think of 800 miles of water mains, many of which were in place before World War I, you know that it's just a matter of time before they spring a leak, and they have to be replaced."

Downtown churches face a big challenge keeping up with steam bills for heating their large, open spaces. Jamie Zimmer chairs the finance committee at Central United Methodist Church across the street from the state capital building. Her committee met this week to set a 2012 budget. The steam bill amounts to 10% of that budget. She says a rate hike for steam would probably force cuts elsewhere.

"Our people are very generous," Zimmer says. "They give heavily not only to the church, but to missional offerings. They give very heavily to the open door ministry. And so, as a finance committee, we're very shy about going back to our people and asking for more."

After having supported utility rate increases last year, the Lansing State Journal's editorial board has come out against these proposed hikes. Community Conversations Editor Elaine Kulhanek says it's time for the utility to seek cost-cutting concessions from employees. She says employees now pay 5% of their medical coverage costs. Increasing that to a 20% share would amount to a lot of money.

"It was a million and a half dollars, $1.4-something million dollars, and that is a lot of money," Kulhanek says. "The rate increases, I believe, combined, are about $3.3-million. So it's almost, it's 40%, 44% I think, of the amount they're going to get in a rate increase. We would like to see them take some measures like that before they ask people for more money."

Spokesman Mark Nixon says the Board of Water and Light has been working to control costs.

"Our full time employment equivalent has dropped by nearly 10% over the past five or six years," Nixon says. "That's done through attrition, but it certainly is an attempt to rein in costs. And also, we have been consistently looking at health care benefits and what we may have to do to rein in those costs as well."

After hearing from the public tonight, the Board of Water and Light's commissioners will meet again next Tuesday to vote on the hikes. Any changes made to water and steam rates would go into effect March 1st.