Utility rates in Ames, which haven’t been increased in more than 25 years, may be raised to support the city’s growing power and sewage needs.

The Ames City Council is discussing possible increases in the budget for electric and sanitary sewer operating costs. Ames officials project more revenue will be needed over the next five to 10 years because of capital improvements in utilities.

City Manager Steve Schainker expects electricity rates will need to increase about 3.5 percent to maintain and replace boilers and expand the capacity to supply more power. Although the need for more revenue is not immediate, Schainker said a gradual increase may be a good option to support up an expansion costing up to $150 million.

“We could either wait five years and have a large increase or begin a series of smaller increases now,” Schainker said. “I think people would rather see a gradual increase.”

Electricity rates have not increased since 1979 and are about 30 to 40 percent lower than those of surrounding cities.

Schainker said the stable rates have been a result of prudent management and spreading costs out over time.

Andrew Tugan, ex-officio student City Council member, said that even with an increase, the rate would still be considered low.

“I don’t think it will affect the average user too much,” Tugan said.

“It could be significant to local industrial companies who use a lot of electricity.”

The city hired Sargent & Lundy Consulting Group to evaluate the electric needs of Ames for the next 20 years. The group concluded the two pulverized coal-fired steam generating units, which produce 108 of the 151 megawatts needed to supply power to Ames, will either have to be upgraded or replaced.

One unit is 37 years old, and the other is 22 years old. The group estimated that during the next 10 years, $19 million will be needed to refurbish or replace these units, according to the 2004 Electric Supply Integrated Resource Planning Study.

Schainker said the city is also looking at options to either increase the size of its plant or buy power from another plant.

Sanitary sewer rates may increase due to stricter regulations implemented by the Environmental Protection Agency. Schainker said a 15 percent increase is needed, and a 10 percent increase could come as early as the 2006-07 fiscal year.

The increase would be about $1.40 per month for the average user. The combined utility increase of electric and sewer would be about 4 to 5 percent.

“We are planning for the next 20 years,” Schainker said. “Right now our funds are sufficient for operating costs, but not for expansion.”