Page City Council has approved a rate increase for Page Utility Enterprises (PUE). The last rate hike was in 2011, 12 years ago.

PUE board members originally proposed a 40% rate increase for residential and commercial customers, the amount recommended by consultants K. R. Saline & Associates to keep PUE solvent. PUE has dipped heavily into reserve funds because of rising natural gas costs, along with reduced hydro power. The board wrestled with alternative plans, rewriting proposals several times. PUE lost millions and continued to lose money while officials searched for an equitable solution.

After poorly attended public hearings and opposing viewpoints from within the council, they made a surprising decision. Against the PUE Board recommendation, and against consultant recommendations, council voted to give residents a substantial break, reducing the rate increase from 40% to 20%. Commercial customers will still see a 40% increase. 

To help electric customers adjust, rates will increase in three steps. The first hike is July 1. Residential customers will see a 10% increase, followed by 5% increases Oct. 1, 2023, and Jan. 1, 2024. Commercial customers can expect a 20% increase beginning July 1, followed by 10% increases Oct. 1, 2023, and Jan. 1, 2024.

Residents can thank soft-spoken Vice Mayor John Kocjan for the break. He fought for it, and against expectations, prevailed. Kocjan, attending the public hearing not as vice mayor, but as a citizen, was the only one to speak up, to object and offer an alternative plan.

The Chronicle reported on the debate, the public hearing and Kocjan’s response April 19, 2023:

“I've been in multiple businesses for the past 50 years, and the successful businesses use the business model or business plan just like PUE is doing and they recoup their costs,” Kocjan said. “Some of the council people were whining about the businesses. Well, they're going to recoup their costs just as PUE is doing. That's how they stay successful.”

The majority of Page residents are making minimum wage or on a fixed income and living paycheck to paycheck.

“Those are the ones that are going to hurt, they don’t have any place to get the money from. That means they have to give up something,” Kocjan said. “You see it every day on the TV. Seniors are giving up food, medicine, what have you, just to make ends meet. We’re taking advantage of them.”

At the time, it seemed certain rates would increase equally for home and commercial accounts, 40% across the board. 

Questions remain. How will the rate increase affect businesses and lower-income residents? How will the shortfall affect PUE’s ability to provide reliable power into the future?

Counselor David Auge said at the June 14 council meeting that PUE Board members listened to K. R. Saline & Associates about and their recommendations “three or four times.” 

“I know I've done about four myself,” Auge said. “They were all over the board from basically 42-59%. You know. I definitely feel that that would have been a detrimental effect on Page residents and also the Page economy with those type of rates. The 40% for commercial is going to be a pill to swallow for a lot of businesses.” 

Auge said that even with the residential rate increase cut in half to 20% it would be difficult for many Page residents.

“A lot of them live paycheck to paycheck [and] live on tips,” he said. “We’re hoping that this is not going to be as huge of an imposition on citizens that it might have been. I just hope the citizens continue to support the economy of Page and with a revised interest residential rates, and I think that's all in our best interests.”

The one dissenting vote at the June 14 City Council meeting came from Councilor Brian Carey. 

“I am concerned when I hear the word ‘hope’ mentioned three times as to why we're going to vote for this increase, which does not make the utility run in the black,” Carey said. “We do not pay back the three plus million dollars that we took out of our reserves to get through the decision-making process of the past year. I think it's incumbent upon a city council to look at the big picture, which is the health of our utilities.”

Carey continued, “The other issue that comes to me is that we have a pretty simple rate system between residences and commercial and, as has been pointed out by our utility manager, it’s hard to find the right line in there and be fair to people. Small businesses that are being run on their own locations are the ones that are going to suffer the most because that person lives in town and pays a resident’s rate and then, has a small business, is going to be paid in the commercial rate.”

Owners of short-term vacation rentals in Arizona have financial advantages. They must be treated as residential and not commercial properties. Arizona gives cities little control over vacation rental consequences like residential housing shortages and unfair tax advantages. 

“VRBOs, unfortunately, are treated as a regular residential property, but it’s not to the city's liking,” Mayor Bill Diak said. 

“It’s because we have a state regulation that says we can't treat them – even though a regular rental is considered a commercial business, if you’re running a VRBO it’s considered a residence, not a business. So that is a flaw in our state system that I have fought for the last four years, and I've got about another year and a half to continue to fight that process, to change that, because it is not right."

Carey added that vacation-rental-by-owner businesses, one of the most common businesses in town, will not pay a commercial rate because they are residences. 

“So, someone making a good amount of money on rentals is going to pay much less than somebody just barely making their books balance in a small business, for instance a massage business a health business, a small CPA, whatever,” Carey said. “So, if this passes, I would encourage the board to take up in the future looking at refining our rate structure and seeing if we can put some more equity back into the system.”

“I spoke with the vice mayor once about other utilities that have eight, nine, 12 different categories for trying to put some fairness in there or trying to skew the scales one way or another,” Carey said. “I would encourage that our board does do that I am encouraged that further down in our agenda we're going to put $1.6 million back into the utility budget from our general fund.”

Later that evening, council voted unanimously to repay PUE $1,625,000 the city borrowed 23 years ago during hard times.