FOREST CITY | Forest City residents will see a $3 to $4 per month increase in their electric rates beginning with the bill they receive in August.
The city council last week approved the first reading of an ordinance for the four percent rate hike to help finance the first phase of an upgrade to the city's aging electrical system.
The work is expected to begin this spring.
City Administrator Barb Smith said the electric rate hike will go into effect with the July meter readings, which means residents won't see the increase until they receive their bill in August.
DGR Engineering has recommended the city do an electrical upgrade in three phases over the next decade.
In December, the city council entered into a $118,800 engineering agreement with DGR for a portion of the first phase of the improvements plan.
The estimated cost of this portion, which involves construction of electric distribution improvements in the northern portion of the city, is $1.1 million.
The council has not committed to the other three portions of the first phase of the project, or any portions of the second or third phases.
The total cost for the first phase is expected to be $4.2 million.
The second phase of the plan would cost $3.5 million.
The third phase carries an estimated price tag of $7.1 million.
The city plans to use revenue bonds to pay for the project.
DGR recommends a bonding structure of $3.5 million for the first phase, $7.4 million for the second phase and $4 million for the third phase.
One this year's rate increase goes into effect, the city has the option of not raising electric rates for a few years before beginning to raise them again, or raising the rate each year but doing so in smaller increments.