St. James city officials heard feedback from residents during a Sept. 30 public hearing over a proposed electricity rate increase.

The proposed rate increase is based on a cost-of-service and rate study conducted by Toth and Associates, an engineering consulting firm hired by St. James to study the electric utility to increase its revenue.

Without any rate increase, the electric utility is projected to fall almost $1 million short of the revenue needed to operate by next year, according to the study by Toth and Associates.

That negative balance would increase to more than $5 million by 2031 if a rate increase isn’t implemented.

Craig Woycheese, director of utility rates at Toth and Associates, presented data from the cost of service and rate study at the public hearing. He said that doing nothing about the electric utility’s revenue shortfalls isn’t a viable option.

“Doing nothing accumulates a pretty large deficit in cash. We can’t run on a deficit in cash,” Woycheese said. “In any type of operations business you run, you’ve got to maintain solvent overall, so this is the driving force behind the rate adjustment piece in reality.”

The study proposed two solutions for increasing the electric utility’s revenue to the amount needed to operate in the black: a one-step plan that involves a one-time increase in utility rates of a cumulative 27 percent, and a three-step plan that phases in rate increases over three years in smaller increments, with a cumulative increase of 33 percent by the third year.

Under the one-step plan, customers would see an immediate  and one-time 27 percent increase in their utility bill. Under the three-step plan, electricity rates would increase incrementally over three years: 12.25 percent in year one, 10 percent in year two and eight percent in year three.

Woycheese’s presentation to the public outlined three questions that the rate study had to answer:

• What the electric utility needs in additional revenue?

• What to charge each class of customer?

• Which of the two implementation plans residents want?

Woycheese said that either plan will get the job done, but it is up to residents and city officials to decide how they want to implement the necessary rate increases.

“The first two are arithmetic and science,” Woycheese said of determining how much additional revenue is needed and how much to increase rates for every class of customer. “The third one is a policy choice that you have to make of how you want to go about it and get the money that you need.”

St. James residents at the public hearing expressed frustration at the prospect of paying more for electricity at a time when other city utilities are becoming costlier. In September, city councilors voted to increase costs for the solid waste utility. City officials have also discussed the possibility of raising rates for the water utility, which had a net-negative balance of nearly $200,000 according to the city’s budget for fiscal year 2027.

“Costs keep going up. I’ve lived all over the world. This has been by far the most utilities I’ve had and the crappiest electric I’ve had,” said St. James resident Jessica Arzt. “I think that’s probably a lot of citizens’ frustration with it.”

Arzt said she would prefer to see the city adopt the one-step plan.

Another St. James resident who spoke at the hearing, but declined to give her name, said that her family is struggling to keep up with rising costs.

“My concern is my husband and I are both on fixed income. I mean, we’re literally paying more for electricity on a regular basis than we do for rent and the costs just keep going up and up,” the resident said.

She added that, while she understands the need for updating utility rates, it is difficult to afford when the cost of multiple utilities go up at the same time.

“We spent all this money for trash cans,” she said of the recent solid waste rate increase. “If the need was this bad for electric, why are we spending money on other things?”

Other St. James residents saw a potential electric rate increase as another burdensome cost at a time when general inflation is raising the cost of all kinds of goods and services.

“It’s not just electric. Everything has gone up. If you’re fortunate enough to have a job where you get a raise every year, it barely keeps up with inflation. You’re not able to get ahead of it,” said St. James resident Sean Murphy. “This is just one more thing. It adds to the pile. It’s not this by itself, but it’s a contributing factor.”

Murphy added that he would also prefer the city adopt the one-step plan for raising rates.

According to Woycheese, the need for the rate increase is also a result of general inflation coupled with a lack of follow-through on rate increases from past city administrations.

Toth and Associates put together a similar rate increase plan for St. James six years ago, which, as Woycheese recalled, would have implemented a three percent utility rate increase yearly for five years.

According to City Administrator Leeann DeMouche, when she was hired into her position in 2024, the city had only implemented one of the five annual increases needed to comply with the plan.

Woycheese said that sticking to the plan combined with COVID-era inflation led to a situation where the electric utility was bringing in less revenue and living off of its cash reserves.

“They ditched the back end of it, and the problem with ditching the plan is that COVID drove prices up ridiculously in the electrical piece. You basically have a double whammy at the end of the day,” Woycheese said.

With the public hearing complete, the St. James Utility Board will vote at its Oct. 6 meeting on whether to recommend a rate hike and which of the two rate increase plans to recommend to the City Council. Then, City Council members will consider whether to officially implement the rate increases at their Oct. 13 city council meeting.

Woycheese said adjusting revenue shortfalls for the electric utility is an unpleasant necessity that St. James has to address.

“I see what people have to make ends meet. You can’t run this in a negative cash position, though. The city is not in the business to basically screw you over at the end of the day,” Woycheese said. “In reality, they’ve got to make sure you have power to serve you. But they can’t do that if we ran in the red on a cash basis. Once you run out of money, you’re done.”

While St. James residents realize the electric utility has to be maintained, higher costs are still a tough pill to swallow.

“I understand the cost increases,” Murphy said. “But at a certain point, something’s going to break, and it’s probably going to be the people who don’t have enough money at the end of the month.”