The Fayette city council voted unanimously to raise residential electric rates by 10% and commercial rates by 3% at its latest regular meeting on Tuesday, November 22.

The city will now hold two public hearings on the matter before new rates go into effect.

The rise stems from a recommendation by Craig Woycheese from Toth & Associates, the company that recently carried out a study of Fayette’s electric rates. The study revealed that commercial rates, which are already higher, effectively subsidize the city’s residential sector.

The two combined rate hikes average a total increase of 6%. Smaller, incremental increases could be in store for the future. The study recommended increases of 3% per year over the next five years, which the council is expected to approve in the future. Electric rates have not gone up since 2007.

“We need to make a five-year plan for improvements and a five-year plan for rate adjustments,” said Mayor Jeremy Dawson. 

The council briefly considered a smaller increase for residential and a larger increase for commercial to achieve the overall 6% hike still. Ultimately, council members voted to implement the recommended hikes in an effort to make the residential side less dependent on commercial accounts.

“If we lost a commercial customer because they went solar or lost a business, we wouldn’t feel that loss into our electrical surplus,” explained Mr. Dawson. 

According to the study, residential electric customers should expect an increase of about $7 per month, with increases of $50 to $75 per month for commercial customers.

“The study itself was long overdue,” said Southwest Ward Alderman Grafton Cook. “I think it goes without saying that an increase is due. Unfortunately, this time it falls on the residential side.”

The increase comes at a time when water rates are also expected to go up. Council members voted to approve an increase of $1 per 1,000 gallons of water by the Howard County Regional Water Commission. The 18% increase raises the price the city pays for 1,000 gallons of water from $5.50 to $6.50. That increased cost to the city will ultimately be passed on to consumers, although the council has not yet done so.

“The other two board members are leaning toward the highest rate of $6.50 to be able to cover any future expenses or needs that may arise,” Mayor Dawson explained to the council. The city has one representative on the three-person board. She is Dashayla Bush, the city’s utility office manager.

The city last raised water rates in October 2020 in order to fulfill its contract with the Howard County Regional Water District.

A rate hike of $1 will keep the water district barely in the black. “Anything less leaves them with a negative cash flow,” said Mr. Dawson.

In other business, the council voted to accept the highest bids for five vehicles listed as surplus. The five sales totaled about $12,100.