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                    "STARKVILLE \u2013 Starkville Utilities hopes to implement incremental electric rate increases, raising the base customer rate by about $2 annually over the next three years.\nEdward Kemp, general manager for the utility, said the proposed plan would generate an additional $650,000 a year that will help fund capital improvements.\nEven with the rate increases, however, Kemp said the electric department\u2019s Fiscal Year 2027 budget will include a $375,000 shortfall.\n\u201cThe story on this is really the increased (operation and maintenance costs),\u201d he told the board of aldermen Friday during a work session at City Hall. \u201cI know everyone has seen that and felt that whether it be doing maintenance on your vehicle or buying groceries at the store or doing any type of construction. We\u2019ve certainly seen it in the electric department as well.\u201d\nKemp said the proposed rate increases would be the first implemented by Starkville Utilities in a decade, though wholesale price hikes from Tennessee Valley Authority were passed onto utility customers in 2023 and 2024. Those increases ranged between 4.5 to 5%, he said.\nThe proposed rate structure, which the board of aldermen will consider during its Tuesday meeting, would see a 2% increase annually each November from 2026 to 2028, raising the monthly base customer charge from $17.03 to $19.03 in the first year. For a customer using 1,000 kilowatt-hours of electricity a month, that translates to an increase in the average monthly bill from $119.75 to $121.85 in the first year.\nKemp said even though Starkville Utilities has one of the lowest operating and maintenance costs per customer among other utilities in the TVA territory, it has still seen that metric increase by more than 75% over the last decade. Additionally, he said prices for frequently used materials have risen across the board since 2022, with increases ranging from 25% to 70%.\n\u201cThere\u2019s been really no difference in how we\u2019re maintaining and operating the system, but it\u2019s going up, and then our net income \u2026 is going down, even into the negative,\u201d Kemp said.\nKemp said the rate increase proposal would set the utility up well to execute its updated five-year capital improvement plan. He said the system has been depreciating faster than the utility has been reinvesting in it since 2022.\n\u201cThat\u2019s probably OK for a year or two, but long term that\u2019s going to cause you some problems,\u201d he said. \u201c\u2026 That is very much so what we\u2019re seeing on the water and sewer side. We\u2019ve been running into the red for a long period of time, and now we\u2019re having to play a huge catch-up game on that.\u201d\nGetting ahead\nThe city has been working to improve its wastewater treatment plant after a 2024 report found the plant needed $43.8 million worth of facility upgrades. The report recommended about $15.5 million worth of those needed improvements needed to be done sooner rather than later, including replacing six aerators that failed in 2019 and installing new headworks to allow for future capacity growth.\nWard 1 Alderwoman Kim Moreland expressed support for the increase, noting it should have been considered before 2022, when the system\u2019s depreciation outpaced investment.\n\n\t\t\t\n\t\t\t\n\t\t\t\t\n\t\t\t\tKim Moreland\n\t\t\t\t\n\t\t\n\n\u201cLuckily we are in the position where we can act on the front end, not like what we had to do with water and sewer when it just got to where we didn\u2019t have a choice,\u201d Moreland said. \u201cThis is us being somewhat proactive.\u201d\nKemp said over the next five years, the utility aims to prioritize its pole replacement plan, replacing aging large equipment, replacing street lighting with LED fixtures and making continued investments in smart grid technology. Additionally, the plan calls for investments in substations, including the Northeast Substation, which is the old one without proper voltage regulation.\nNoting the $375,000 shortfall, Ward 2 Alderwoman and budget chair Sandra Sistrunk said it is not sustainable for the utility to continue filling the gap by drawing from its cash reserves, which Kemp said currently sits at about $7 million, just below the rule-of-thumb benchmark of roughly two months\u2019 worth of power costs.\n\u201cWithout the rate increase, \u2026 you\u2019d be taking a million or so out of your ending cash reserves, which just hastens the using up all of the cash reserves that you\u2019ve built up,\u201d Sistrunk said. \u201cIt is simply not sustainable.\n\n\t\t\t\n\t\t\t\n\t\t\t\t\n\t\t\t\tSandra Sistrunk\n\t\t\t\t\n\t\t\n\n\u201cI like the incremental approach,\u201d she added. \u201cI think it does give people a chance to build it into their budget and that sort of thing. I\u2019m a little bit afraid that it might not be quite enough, but we will accept your guidance on that.\u201d\n\t\t\t\n\t\t\t\t\t\t\n\t\t\tMcRae is a general assignment and education reporter for The Dispatch.\t\t\t\n\t\t\t\n      \n      \n        Quality, in-depth journalism is essential to a healthy community. The Dispatch brings you the most complete reporting and insightful commentary in the Golden Triangle, but we need your help to continue our efforts. In the past week, our reporters have posted 30 articles to cdispatch.com. Please consider subscribing to our website for only $2.30 per week to help support local journalism and our community.\n      \n    \n\n\t\t\t\n      \n      \n        Quality, in-depth journalism is essential to a healthy community. The Dispatch brings you the most complete reporting and insightful commentary in the Golden Triangle, but we need your help to continue our efforts. In the past week, our reporters have posted 30 articles to cdispatch.com. Please consider subscribing to our website for only $2.30 per week to help support local journalism and our community."
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