PUC weighs deposit hike

FAIRMONT — The Fairmont Public Utilities Commission on Tuesday discussed possibly raising the amount of the deposit required for hookup to $200 for electric and $50 for water/sewer.

The current policy, in effect since May 2003, calls for a deposit equal to one month’s charges for all utilities furnished by the city, or a minimum of $100 for electric and $25 for water. Only renters are required to pay the deposit, according to city staff, but every October, those customers who have paid promptly for 12 months receive their deposit back as a credit on their utility bill. No commercial customers or property owners of the metered address pay any deposit.

Paul Hoye, city finance director, told the PUC that Fairmont’s deposits are on the low end. For example, Austin and Truman charge $300, with Jackson and St. James requiring a $250 deposit.

“The change is going to affect some customers, but I think it’s fair,” Hoye said.

He explained that when renters move, some don’t pay their last bill, believing the deposit will cover the balance, but they have incurred additional charges after the last bill is sent. Collecting on these delinquent accounts has become easier if the customer still lives in Minnesota. The state allows the PUC to “recapture” the revenue through the customer’s income tax return.

“I certainly think it needs to be raised. We’re really low compared to other cities,” said Commissioner Mary Jo Moltzen.

“I’m concerned about the deposit impacting low-income (customers),” said Jeff Ziemer, PUC chairman.

“Is there a dollar amount you’d feel more comfortable with?” Moltzen asked.

“I’m not opposed to us collecting our fair share, but I don’t know what the right amount is,” Commissioner Dave Segar said.

Ziemer also asked about the reasoning behind returning the deposit before service is disconnected.

Segar also questioned that policy, saying that landlords do not return deposits until you move.

“That’s one of those things, to me personally, that didn’t make sense,” said Hoye, adding that the policy has been around for many years.

To bring the matter to a vote, Moltzen made a motion to approve the proposed deposit increases, and Segar seconded it.

Ziemer suggested tabling the matter until the full commission was present. Commissioners Jeff Vetter and Brian Johnson were absent from Tuesday’s meeting. Moltzen and Segar agreed, withdrawing their motion and second.

In other business, Kyle Meyers, governmental services partner at Abdo, Eick and Meyers, reviewed the 2017 audit of the electric, water and wastewater divisions of the utility department.

“Overall, you have a good cash flow, and your rates are sufficient to cover costs,” he said.

The water and wastewater departments generate enough income to cover operations as well as pay the debt on both structures. The electric department has no debt but used cash generated from its operations to cover those costs and to pay for capital needs without having to borrow any money.