Anchorage Daily News

PALMER -- Two city councilmen unsuccessfully pushed a measure Tuesday to shelve a planned hike in Palmer's water and sewer rates. But residents could still get a break.

Councilmen Tony Pippel and Brad Hanson lost their bid by a vote of 5 to 2 to put on hold rate increases of 6.4 percent for water and 15.4 percent for sewer. They argued residents were already hard-hit by increases in other utility bills. Other council members and city officials agreed, but said the city needed to raise rates to keep up reserves for necessary repairs and building. Still, the council may take up the issue again later this month.

The council is expected to get a review of the city's sewer and water rates before its Oct. 28 meeting from the Anchorage consulting firm AKT.

Depending on that information, the council could still vote down the increase, lower it or keep the planned rate hike in place. The rate increase is scheduled to take effect Nov. 1.

In September of 2006, the consulting firm Honchen & Uhlenkott, which was then bought by AKT, recommended the city raise its water rates by 19.4 percent and sewer rates by 46.2 percent.

Those increases were based in part on the need to cover expenses for repairing and building sewer and water lines.

At that time, the council voted to spread the recommended increases over a three-year period so consumers wouldn't have to absorb the whole increase at once.

As a result, the rate increases for 2006, 2007 and this year were scheduled at 6.46 percent for water and 15.4 percent for sewer.

If the increases go through, the average family of four that uses 12,000 gallons of water a month would pay $33.60 for water each month and $49.50 for sewer. Right now, that family of four pays $31.80 a month for water and $44.40 for sewer.

Speaking in favor of his resolution, Pippel noted that the city has about $4 million in a sewer and water reserve fund.

He said the rate increases were based on Honchen & Uhlenkott's belief that the city spends a lot of its own money to build or repair sewer and water projects, but since that study, "70 percent of our water and sewer projects have been built with somebody else's money," Pippel said, meaning government grants or matching funds.

He said people on fixed incomes will be hurt the worst if rates go up.

"For people living on the margins, food and energy aren't luxuries," Pippel said.

Then he mentioned Enstar's plans to raise its rates by 22 percent next year. That will further hurt residents financially, he said.

"For now," Pippel said, "We should roll back the increase."

City Manager Bill Allen is against any move to stop the increase.

"You'll have to play catch-up," he said. "This would be a serious mistake. The operating costs of running the utilities have not gone down."

Allen also said the grants from government agencies aren't guaranteed to be available every year and that if the city has to dig into the reserve, "It can go away in a couple of short years. It's not prudent financially."

Palmer has spent millions over the past several years replacing aging water and sewer lines throughout the town.

The city also has a current request in to the state for up to $7.5 million in funding to do road design and construction and replace water lines on Sherrod and Gulkana roads.

Hanson said he voted against the plan two years ago -- the only one on the council who did -- and wanted to take the repeal up now.

"The ratepayers deserve a year off," he said.

But Councilman Mike Chmielewski noted the review of the city's rate structure is pending.

He advised the members to wait until that information is available and then take action on what rate should be approved at the council's meeting on Oct. 28.

Mayor John Combs appeared to support the city manager in keeping with the proposed rate increase that is scheduled to start Nov. 1.

"A deal is a deal," the mayor said of the three-year plan, but he also agreed with the majority to wait until Oct. 28 to vote on the rates.

Find T.C. Mitchell online at adn.com/contact/tcmitchell or call 352-6716

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