Mayor floats water and electric rate hikes

Nathan Wilson

City utility trucks make repairs on Mill Street.

Mayor Ronnie Williams Jr. is leading the charge to increase residential water and electricity rates in the City of Natchitoches with a series of town hall meetings discussing the topic. In the first meeting Aug. 18, Williams’ administration was joined by members of the city council and consulting engineer and former Parish President Rick Nowlin in making the case for the rate hikes. Councilperson-at-large Betty Sawyer-Smith concluded the first town hall meeting with an explanation for the push to raise utility rates. “There are a lot of things that we’ve got to do in Natchitoches, and we just don’t have the money,” she said.

The move is an attempt by Williams’ administration to position the city government for long-term stability amid rising operating costs and deferred investments in utility infrastructure. Council member Eddie Harrington noted the city’s expenditures last year exceeded its revenues and significantly depleted the city’s accounts. “Balancing the budget based on reserves is terrifying,” he said. “If nothing is done, eventually the state steps in.” The rate increases would also fund two initiatives by the city administration by funding higher pay for city employees and allowing for the construction of a new water treatment plant to quench the city’s thirst.

As justification, city officials are presenting data showing typical electricity and water utility charges across a range of Louisiana cities. It shows Natchitoches residents paid 8.9 cents per kilowatt-hour during the first half of 2021. This rate placed Natchitoches as fifth lowest among more than 30 municipalities, but it doesn’t reflect higher fuel prices since the beginning of the year or the city’s new three-year power purchasing agreement with CLECO signed May of this year. An August 2022 bill received by a city resident suggests the total rate for July is now over a third higher at 12.2 cents per kilowatt-hour.

According to the city’s data, Ruston, St. Martinville and Welsh and Terrebonne Parish had lower residential electricity prices than Natchitoches in 2021. None of the municipal electric utility providers responded by press time to Natchitoches Times’ requests for comments. With the exception of Ruston, the municipalities are all members of the Louisiana Energy and Power Authority(LEPA), which is a group of 19 municipalities that historically possessed either their own power generation plants, distribution systems or both. Membership is only available to cities that owned elements of their electricity infrastructure when LEPA was formed by the state legislature in 1979.  Ruston and Boyce are eligible to join LEPA but are not members.

Today, LEPA operates power plants that offer electricity to its members, but they aren’t obligated to purchase power from the organization, and Natchitoches declined a bid by LEPA to be the city’s electric provider when it selected CLECO as its exclusive provider. LEPA general manager Kevin Bihm explains the terms cities negotiate with electricity providers largely comes down to timing. “It depends on when they’re going out for renewal of a contract, what the market conditions are,” he says. “If natural gas is low and prices on the market are low, and they lock in for a five-year contract it works out great.”

LEPA membership is also not sufficient to guarantee municipal residents enjoy favorable rates for electricity. Minden is a member, but had the misfortune of signing an unfavorable 20 year contract with SWEPCO over a decade ago. Among all cities represented in the 2021 data, it continues to have the highest electricity charges at 14.9 cents per kilowatt-hour. The electric rate Minden residents pay is based on their city’s expectation at the time that SWEPCO would build a power plant nearby. As electricity travels long distances, energy is lost in the form of heated transmission lines, and Minden residents are now paying for both the energy they receive from distant power plants and the energy that never makes it to them.

A little over a decade ago, Natchitoches operated its own power plant, but hosting a generating site is not necessarily the key to low electricity prices. Alexandria maintains a municipal power plant, but the city usually purchases electricity from other suppliers to get better pricing. Its residents also paid on average 13% more for electricity in the first half of 2021 than the rate in Natchitoches. Bihm suggests many of LEPA’s members have lost interest in maintaining municipal power plants. “Ruston, Natchitoches, Morgan City, Plaquemine and Houma all built the old simple cycle steam generating units,” he says. He lists all of them as having shut down or been damaged beyond the point of repair.

Today, Natchitoches residents’ electric bills are divided into two distinct charges. The Power Cost Adjustment (PCA) is paid to CLECO for the electricity it supplies to the city. The PCA charge is negotiated by a contract between the city and the electric provider but fluctuates based on the cost of fuel. The KWH consumption rate is the city’s share of the revenue generated by residents’ electric consumption and is typically a smaller fraction of the total bill.

Director of Utilities Matt Anderson explains how the funds generated by the KWH are used. “That pays salaries in the electric department, buys those bucket trucks you see, buys the poles, the transformers (and) the wiring. All of that is paid for out of the energy portion of your electric bill,” he says. “We raised that energy portion from 2.4 cents per KWH to 2.7 per KWH in 2017, but prior to 2017, that 2.4 cents had been in place since 1999.”

Along with gauging the public’s appetite for increasing the KWh rate, the town hall meetings provide a forum for city officials to assess the electric rates residents may be willing to tolerate. Anderson suggested inflation is pressuring city officials to consider a KWH increase of up to 1.5 cents per kilowatt-hour. The resulting KWH rate of 4.2 cents per kilowatt-hour would represent a nearly 56% increase in the city’s portion of electricity charges and fund much more than the city’s utility department; it would also provide pay increases for hundreds of city employees. To frame the impact on the city’s finances versus the cost to residents, Anderson estimates the cost to each household. “The average household uses a little over a thousand KWH per month,” he says. “1,055 I think is the exact number, so if we raised that 1.5 cents, the average household will see about a $15 rise.”

The city police and fire departments are considered especially critical because of their role in public safety and longstanding challenges in recruiting and retaining personnel. Fire Chief John Wynn describes the need to increase pay in his department. “Ruston is starting their firemen off at $10 an hour and I believe Pineville is starting theirs off at $9, and from my understanding, both of them are trying to get an increase. Our firemen start off at $8 an hour,” he says. “It’s hard to retain people at that amount, especially when we have neighboring departments starting off at $10 or $12 an hour.”

Natchitoches also enjoyed relatively low water rates in early 2022, with only Franklin, Houma and Thibodaux reporting lower costs for a household consuming 2,000 gallons of water per month. Anderson stated the city is contemplating raising the price from $9.50 for 2,000 gallons to $17 for 2,000 gallons, which would place it near the middle of surveyed municipalities. “I believe the first 2,000 gallons would end up costing around $17, and if you look at rates of other water systems that is still extremely cheap,” says Anderson. Residents who use more than 2,000 gallons are billed for every additional 1,000, but residents who use less still pay for 2,000 gallons. “If you didn’t use any water at your house, you would still pay $17. You pay $17 for the service,” he says.

Increasing the water utility rate would offset rising costs for treatment chemicals, which are dependent on petroleum and natural gas prices. Anderson stated the city is on track to spend around $1.7 million in 2022 for the same chemicals that cost $733,000 in 2019 when oil prices were lower. The additional funds would also be used to replace aging water lines that reduce the quality of water that reaches residents’ homes.

The city is also reconsidering the water rate to fund construction of a new treatment plant to supplement the city’s existing infrastructure. Anderson revealed a new water treatment plant would cost an estimated $17 million and add between 2.5 and three million gallons of water each day. He explains that the existing plant consists of three treatment units or chains and the largest is three decades old and due for maintenance. “It’s not like we’re failing tests or anything like that, but we know that the plant is at the end of its life expectancy,” he says. “We need to take it off-line to do some extensive rehab.” He explains that the other two treatment chains won’t be enough to supply the city’s needs alone. “We cannot take it off-line because we simply do not have the capacity out of the other two treatment chains to sustain what the city needs.”

Some water providers set graduated water rates so that each 1,000 gallons beyond the standard amount becomes more expensive. The idea is that customers who use large amounts of water are encouraged to conserve the limited resource and those who use less are rewarded. Despite the need for additional water capacity, Anderson suggests water conservation incentives haven’t been seriously considered in Natchitoches. “California, Arizona (and) Nevada have a water crisis pretty regularly. They have shortages of water.” He highlights his aunt and uncle living near Phoenix as an example. “Most of their yard is rocks, and every yard in their neighborhood is decorated in rocks, and in their backyard they have a little 12 by 12 patch of grass and they had a patio built around it with some chairs and an umbrella,” he says. “I asked, ‘why is this the only grass you have?’ They said, ‘We can have more, but you can’t afford the water.” He believes the best way to convince residents to use less water is to have them pay. “The best way to get people to conserve water is charge more for it,” he says. If its cheap, people aren’t going to conserve it.”

Anderson reminds Natchitoches residents that the city council hasn’t yet decided at what level to set utility rates. “These are numbers we’re considering and that’s why we’re having the town hall meetings,” he says. “None of these rates that we’re talking about are set in stone yet.” Additional town hall meetings to discuss the proposed utility rate increases are planned for Sept. 15 from 6:30- 7:30 p.m. in the M.R. Weaver Elementary gym and Sept. 29 at First Baptist Church, Amulet.