City PUC approves 2025 rate increases for water, sewer, and electric

As the end of 2024 nears, the Grand Marais Public Utilities Commission (PUC) has finalized the electric, water, and sewer budget and rates for 2025. 

The PUC met on Nov. 6 to discuss and finalize electric rates and then on Dec. 20 to discuss and finalize water and sewer rates.

City Administrator Mike Roth recommended a 3% rate increase for each utility to the PUC Board. 

For electricity, Roth said the Southern Minnesota Municipal Power Agency (SMMPA) implemented an energy cost adjustment in 2023, which resulted in $47,000 in additional wholesale energy costs in 2024. In addition, SMMPA has also changed how it charges for transmission expenses, increasing the city’s wholesale costs by approximately $20,000 annually. 

Roth and the PUC Board discussed the outlook and expected sales for 2025, given that numerous housing developments are slated for completion next spring and summer. Roth said he hasn’t built that into the 2025 budget yet, but with multiple new customers coming online starting in 2025, an increase in sales is expected. 

The PUC Board unanimously approved the 3% rate increase. 

As for water and sewer, during the Dec. 20 meeting, Roth recommended to the PUC Board a 3% increase in water rates and a 3% increase in sewer rates for 2025. 

“There’s a strategy at work here to have small, reasonable, and consistent rate increases over time,” Roth said during the meeting. 

A portion of the rate increases will be set aside for improvements to the wastewater treatment plant. In 2023, the city of Grand Marais hired AE2S, a Duluth-based engineering firm, to formulate a wastewater treatment facility renewal plan outlining the facility’s condition, needed improvements, and project cost. The expected cost to upgrade and improve the facility is approximately $9 million. 

Roth said another factor contributing to the proposed water rate increases is the increased efficiency of connections. With high-efficiency appliances and fixtures, such as low-flow showerheads, water-saving toilets, washing machines, faucets, etc., water sales have been trending downward for many decades. 

“The expenses go up each year, but the number of gallons that we sell to cover them has gone correspondingly down,” Roth said. To help cover the cost of expenses, Roth recommended a 3% water rate increase for 2025. 

The PUC Board unanimously approved the 3% rate increase for water and sewer.

Kalli Hawkins December 26, 2024