IC residents may see jump in electric bills - KWWL - Eastern Iowa Breaking News, Weather, Closings

IC residents may see jump in electric bills

IOWA CITY (KWWL) - Gas and electric bills for Iowa City residents and business owners may go up in April. The city is looking to take advantage of a new state law, which allows cities to impose a maximum 5 percent surcharge on gas and electric fees.

The city wants to use that extra revenue to pay for essential services, but some business owners aren't happy.

Iowa City is growing, and along with it, its need for public safety services like police officers and firefighters. That's why interim City Manager Dale Helling says a 2 percent franchise fee on all MidAmerican Energy customers in the city limits is a good idea.

That 2 percent fee should cover some of the city's administrative costs, according to Helling. "It should also cover the cost of the nine firefighters we need to staff fire station 4, and hopefully allow us to add a half-dozen new police officers."

Helling says it would generate between $1.5 and $1.7 million  a year for the city.

But Brian De Coster says the fee will only hurt businesses that use high amounts of electricity, like his Laundromania store near Sycamore Mall. 

"Typically, utilties are 30 percent of everything in a laundromat."

De Coster owns 3 laundromats in Iowa City. He says this is just one more tax, on top of a total 7 percent sales tax on the money put into his machines, combined with some of the highest water rates in the state.

"Iowa City's laundromats are burdened more than probably any laundromat in the country," said De Coster.

Some of his coin-operated washing machines would require another quarter from customers, to cover the extra cost.

"If my rates go up, I have to charge more, and pass it on to the people who can least afford it."

Helling understands why there is opposition to the measure, but he says this may be the best option for the city.

"It was specifically intended by the legislature to provide an alternative source of revenue, alternative to property taxes, for cities to meet some of their operating expenses," Helling explained.

Whether the franchise fee will be passed rests solely on the city council; no public vote will be held. The council will hold a public hearing, before voting on the fee in mid-December. If passed, MidAmerican would begin collecting the fee in April of 2010, and then start rebating that money to the city in July.

Online Reporter - Brady Smith

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