The Two Harbors City Council has approved a 2% water and sewer fee increase and a 3% gas free increase in 2020.

City Finance Director Miranda Pietila explained during the council meeting Monday, Nov. 25, the reasons for the increases and how the rates will impact average families and businesses.

"I just want to point out that water and sewer do not make any money. Over the last 10 years, we’ve had a net operating loss," Pietila said. "That’s common with most water and utility rates. Our increase is strictly for operating and maintaining our services. We’re trying to meet our financial obligations."

Pietila cited recent and future planned water and sewer system updates. The city has an annual debt service of approximately $600,000 to pay off the $5 million plant project from 2016. The city also has a planned wastewater treatment upgrade project in the works, possibly beginning in 2020, depending on funding.

"We’re trying to create an efficient and self-sustainable system, not a profitable system," Pietila said.

For an average two-person home that uses approximately 2,970 gallons per month, the total cost will increase about $79.50 to $81.10, a difference of $1.60 per month, which adds up to $19.70 annually.

For a four-person home using approximately 6,510 gallons, the rate will increase from $128.31 to $130.94, a difference of $2.63 monthly, which totals $31.54 annually.

For a commercial business that uses about 15,400 gallons, the rates will increase about $246.90 to $251.99.

The City of Two Harbors supplies 1,348 homestead residents, 180 commercial and 10 industrial businesses.

Pietila said the last increase in gas rates was in 2017, although the city is still playing catch-up from a scheduled rate increase in 2014.

"We had an increase scheduled at $2.12 in 2014 and we decreased that. So we’re still under-charging that 2014 rate," Pietila said.

The 3% increase will mean a $1.50 increase on the average family's monthly rates or approximately $18.91 annually.