Water, sewer fees might rise

County officials say hike is needed to close budget gap

Friday, April 9, 2010

The Charles County Department of Utilities has proposed a 1.8 percent combined increase for water and sewer rates to bridge a $700,000 gap in the water and sewer fund fiscal 2011 budget.

Based on an average usage rate of 15,750 gallons per household the existing quarterly rate for water-only customers is $57.36 while sewer only is $86.69.

If the county commissioners approve the overall increase with the general fund budget in May, users can expect a $4.76 water increase and 47 cent sewerincrease, or a total of $5.23, each quarter which equates to just under an additional $21 for a year.

The proposed $145.28 average quarterly bill is in the middle of the February 2010 rates for Maryland counties.

Carroll County has the highest rate at $202.49 while Harford County has the lowest at $111.04, according to county documents.

Stafford County, Va.'s $142.63 rate would be the most similar to the proposed increase for Charles County.

Despite fiscally conservative management that has kept expenses to a minimum, county officials said users' increased water conservation has dropped revenue to the point where it's created a hole worth almost $750,000.

The fiscal 2011 proposed water and sewer revenues have been suggested at $23.6 million while expenditures are estimated to be $24.3 million.

"This year's [budget] request was to sustain operations," said Director of Utilities Bill Shreve. "There were a lot of requests from the staff that were not included. This budget is to get us through the year."

Besides the small fee increase, Shreve said there were a few other minimal price rises for electricity, sludge disposal and chemicals used for water treatment.

According to the water and sewer fund summary provided by the county, the former would increase by 12 cents per 1,000 gallons while the latter would go up by 3 cents for the same gallon amount.

An increase of nearly $267,000 — or 12.6 percent — for debt service to fund projects is one of the main factors in the sewer rate increase, while a decrease in user fee revenues is adding a $196,500 burden to the water rate increase equation.

The discussion of the five-year capital improvement plan worth nearly $68 million was postponed until the commissioners' meeting April 13.

Among the projects on the list are the Swan Point Water Tower Rehabilitation worth $1.3 million; a $3.1 million automation and technology plan; and a $1.1 million utilities office planned for the Waldorf area.

In line with the discussion on the rate hike, on April 6 the commissioners were also presented with the results of a water and sewer rate study conducted by Municipal & Financial Services Group, consultants based in Annapolis.

Services Group Manager Lisa Zitomer explained that the study's purpose was to look at alternative ways to structure water and sewer usage that would promote water conservation, address customer complaints and formulate a five-year fiscal plan for the enterprise fund.

The study showed a steady decline within residential water use, which is directly proportional to a rise in debt service.

"The total system's debt service is almost going to double," Zitomer said.

To combat that trend, the contractors proposed two alternatives to the current rate structure which has a roughly $2 increase to the quarterly bill for both sewer and water — or 47.8 percent change — making it a possible $8.87 quarterly bill for fiscal 2011.

Alternative B would include a block rate structure determined by winter quarter use for water single family home customers as well as winter quarter average usage for sewer users.

Alternative C would put a 24,000 gallon cap on sewer use and base its water user fee on quarterly usage numbers.

Zitomer's group recommended the latter alternative to the commissioners.

"The whole bill is hardly changing at all," said Edward Donahue III, president of Municipal & Financial Services Group. "The typical customer here will see a change of 20 cents in their bill. For them it's like no change at all."

The residential average used for examples was 12,000 gallons for winter quarter usage and 18,000 gallons for summer quarter usage.

Donahue warned that unless there was a significant increase to the usage fee, customers would not reduce their consumption rates.

"The problem is there is no design to address every concern or every circumstance," Donahue said. "Unless there is an independent rate for every customer someone is going to be helped [financially] and someone is going to be hurt."