The City of Flin Flon is awaiting regulatory approval for a utility bill increase first proposed nearly a year ago.
City council has applied to the arms-length Public Utilities Board (PUB) for permission to charge residents another $120 a year for utilities.
Council made the application on June 30, 2015 in hopes it would take effect in September 2015, but the PUB, as of mid week, had still not ruled on the application.
City treasurer Glenna Daschuk said the proposed rate increase is necessary to cover the utility department’s deficit of $1,064,278 for 2014.
She said the deficit stemmed from the unexpectedly high volume of water and sewer line repairs required in 2014, the year of an unusually harsh winter.
The city is not permitted to use general revenues to fund the utility system, as it must be self-sufficient. While a yearly deficit can be temporarily paid off with dollars from elsewhere – as happened with the city’s 2014 deficit – those dollars must eventually be recovered from users of the system.
Council has taken out a temporary line of credit to assist with cash flow as the PUB mulls over its decision. The line of credit is for $1,775,000, an amount that includes the utility deficit as well as $698,000 to cover cost overruns to date at the water treatment plant. That leaves $12,722 in wiggle room.
Daschuk said the application to the PUB covers only the 2014 utility deficit. Cost overruns at the water treatment plant are capital expenses not funded through utility bills.
“We have additional options available [to cover the treatment plant overruns] and have not made a determination at this time which avenue we will use,” Daschuk said.
The city’s application to PUB calls for utility customers to pay an additional $10 a month – or $120 a year – over a period of five years. The PUB may approve the request as is or modify it. An outright rejection seems unlikely.
Once the city learns of the PUB’s decision, Daschuk said it will take out a permanent line of credit to cover costs until revenue from the rate increase can pay off the deficit incurred.
Flin Flonners currently pay $1,116 a year for utilities. The increase would raise that amount by 11 per cent to $1,236.
A PUB spokesman said a decision on the application is expected in July. The spokesman said that due to PUB’s limited resources, Flin Flon’s application went to the bottom of the pile after the city was granted an interim rate increase in late 2014.
