Utility Rate Increases Catch Many By Surprise

If you opened up your City of Portland utility bill recently and you immediately started strategizing how to save water, or electricity, you are in good company.  Utility rate increases for Portland's three major municipal run utilities (water, sewer, and electricity) went into effect with the most recent utility bill. Behind the sticker shock though these rate increases reflect real tangible policy issues.

Water rates increased by 7% this month.  Most water bills rose by a few dollars despite that being the largest increase by percentage. While it isn’t something most people think about, the water isn’t the only thing being paid for, but also the infrastructure under the ground to get that water to the faucet.  In most cases that infrastructure includes underground copper water supply lines.  In the past though lead and galvanized pipes were common.  Both of which can lead to health problems due to leaching into the water.

Michigan's Lead and Copper Rule (LCR) requires all cities to inventory their water supply lines to identify lead lines.  In many cases records are incomplete or non-existent for older homes.  Therefore, the only way to identify supply lines in need of replacement is to dig it up and inspect it.  The city received a grant of about a quarter of a million dollars from the Michigan Department of Environment, Great Lakes, and Energy (EGLE) to pay to inspect about 400 undocumented service lines in 2024. 

To date the city Water Department has not found any lead lines but they have found about 300 galvanized lines that were previously connected to lead (GPCL) which will eventually have to be replaced.  In addition, remaining “unknown” lines still must be dug up and inspected under the LCR.  The cost of the remaining investigation work on water lines not covered by the EGLE grant, along with the eventual replacement of the GPCL lines are the major driver of the rate increase.  This is required under the LCR passed in 2018, and has a 2041 deadline to complete all replacement of lead and GPCL lines in the state.

At the same time, sewer rates rose by 3%.  This rise is to keep up with operational costs according to City Manager Andrew Dymczyk.  Much work has been done in the past few years to upgrade Portland’s outdated sewer infrastructure including overhauling much of the waste water treatment plant systems, and replacement of sewer lines along and under the Grand and Looking Glass rivers.  Many parts of the sewer system dated from 50 to 80 years ago, and were in poor condition.  For instance sewer lines near the river were leaking allowing river water to infiltrate into the sewer causing further damage and risking overwhelming the capacity of the wastewater plant. 

Dymczyk says that had it not been for a $3 million dollar appropriation from the state legislature for the project rate increases would have been even higher.  Despite that state funding, rising costs and supply chain issues since the COVID pandemic meant that many areas of the waste water treatment plant were unable to be included in the upgrades over the past several years.  As a result, the City along with State Representative Gina Johnson (R-Portland) have requested an additional $9.2 million appropriation from the state legislature.  According to Dymczyk, that funding would allow the completion of upgrades at the waste water plant and rehabilitate sewer lift stations located around the city as well as addressing areas of sewer lines subject to infiltration from ground water.

Lastly, the Board of Light and Power (BLP) enacted at 4% rate increase for electric customers.  According to Electric Superintendent Todd Davlin, the driving force behind this is a rise in the cost of power the BLP purchases on the market from producers.  The factors driving these rate increases are multifaceted.  In the face of increasingly warm summers, more people are using air conditioning which drives up demand and thus more spikes in the cost of electricity seasonally.  The same is true though to a lesser extent with winter heating for those who use electric heat. 

In addition, Consumers Power recently retired the J.H.Campbell power plant in May. The coal fired plant, which had been in operation since 1962 was the last coal fired plant operated by Consumers Power.  The BLP as a member of the Michigan Public Power Agency owned a minor stake in the plant and received a portion of the city’s power from it.  As the State of Michigan, and many other states, transition away from fossil fuel based energy generation, the upfront cost of investing in clean energy infrastructure to replace the power generated by plants such as J.H. Campbell is ultimately, indirectly passed along to electric customers. “These pricing pressures, driven by warmer weather and legislation, highlight the importance of balancing environmental responsibility with the need for a reliable and affordable power supply,” says Electric Superintendent Davlin, “as the energy landscape continues to evolve, maintaining cost stability and reliable service for customers remain our highest priorities.”

In general the timing of rate increases for the utilities falls during the summer as it is timed to the fiscal year which begins July 1st.  As a result the annual budget process, utility rate increases are considered by the City Council in May.  At that time, the public is invited to share feedback during the public comment period.   “Our goal is to balance fiscal responsibility with keeping rates fair,” says City Manager Dymczyk,  “ensuring our utilities remain strong and reliable for the community’s future.”