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Huntsville City Council votes down rate increase for Huntsville Utilities

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HUNTSVILLE, Ala. (WHNT) - Huntsville City Council members voted down the first of two proposed rate increases for Huntsville Utilities customers. The first rate hike that would have been a $2.50 increase beginning May 1 failed with a 3-2 vote.

Council members then discussed the second phase of the rate increase but determined it did not make sense to vote after defeating the first phase.

Huntsville Utilities representatives says both of the proposed rate hikes would have brought in $4.9 million dollars for the company.

This "no" vote is a blow to Huntsville Utilities. Executives had really been counting on the increases as proposed. There were capital improvement projects to pay for, and CEO Jay Stowe said they also needed more funds to make up for increasing costs while at the same time, they are seeing decreasing revenue. He said the increases as proposed would have provided more fixed revenue when they're dealing with instability in the variable customer energy usage.

Instead, no increase. That throws their affairs out of whack, and possibly other long-range things like bond ratings, he said: "It may slow down some of the projects that would have helped our customers," commented Stowe. "It would have helped drive down costs. It would have helped control their costs better. That's the plan we brought to the council. They heard something different."

Stowe had less answers about what's next. He said the plan they had in place, and presented to the council for approval, had been long-vetted by their own board and the TVA. It had been in the works since December, he said, and gone through all the necessary steps.

Now, it's back to the drawing board with a long process ahead to find out what this denial means for their bottom line, and services Huntsville Utilities provides. They need to meet with the same parties who examined the last plan to find the answers to many questions.

"We're going to revisit what all the options are and try to come back with a plan," said Stowe.

This decision doesn't come without a cost, even though it could mean that cost presents itself in the future. Stowe said this definitely means they will come back to the council with another request for revenue raising.

"There will need to be more revenue," he stated. "We can't avoid a rate increase forever, there will have to be a rate increase at some point. We will have to bring back more information so the city council understands more clearly what we tried to say tonight. We thought we did a good job of explaining it, apparently they had some more questions, and that's what their job is."

But that job involved the council's arduous meeting. Thursday, it took several hours for the body to reach a vote.

"The process of good governance is sometimes a little bit ugly. Tonight was a little bit ugly," commented Stowe.

The public had a chance to comment, several of whom turned up to ask council to vote against the plan.

One woman even ended her passionate speech against the proposal with a warning to council members about the upcoming election.

Council members Kling and Culver each threw out separate motions, proposing different ways to amend the proposed rate increases. Kling wanted to see a 1.9% increase on the usage side across the board for all Huntsville Utilities customers, something he said was more fair. Culver wanted something else. Culver wanted to see the first set of increases cut in half, pared down to $1.25 instead of the proposed $2.50. Each of these options, Stowe said, would not be a compromise but a detriment.

City attorney Trey Riley called into question amending the proposal. He said since the rate hikes, as proposed, had been vetted by the TVA and Huntsville Utilities and had gone through the proper channels, he didn't think any amendments to the proposal would be legal to enforce.

Councilman Richard Showers threw out a motion to postpone.

Amid all the motions on the table that night, many became confused.

When the motions were finally withdrawn or voted down, the time finally came to vote. Council members Mark Russell and Jennie Robinson voted for the proposal. Robinson had argued that it would go toward improvements that would benefit customers down the line.

"It would be very short-sighted of us to look at this in the immediate," she said. "We have a long-range plan in place here."

Council members Richard Showers, Bill Kling, and council president Will Culver were the deciding votes against the plan.

This same meeting, the council approved the purchase of four service trucks and a new bucket truck. Stowe told the council much of this equipment would be used to install fiber, and fiber would not have been directly benefitted by a rate increase.