May 10, 2007

City Considering Price Hikes For Water, Sewer

Rising costs of production and distribution combined with a dwindling working capital fund are forcing the city of Memphis to review water rates.

The Memphis City Council reviewed a rate hike proposal at the May 3rd meeting. The proposal calls for a five-percent rate increase with a second five-percent hike to go into effect in September of 2007.

Currently customers pay a $10 availability charge plus $9 minimum for the first 1000 gallons. After the initial $19, water costs .459 cents per 100 gallons.

Under the new proposal, the city will eliminate the availability terminology. It will be combined into the initial minimum charge for the first 1,000 gallons, meaning all customers will pay $19 for the initial 1,000 gallons or less. The city stresses that this is not a rate change, it simply is eliminating the availability verbiage that was confusing for customers.

The rate increase will impact the water used beyond the minimum. The rate would go to .482 per 100 gallons of water if approved by the council.

For the average customer that uses 5,000 gallons per month, the price hike would cause the monthly bill to go up from $37.36 to $38.28.

Sewer rates take a bigger hit, as the minimum charge would be raised from $3 to $5 in wake of the city’s need to perform an inflow and infiltration study on the city’s aging sewer system. In addition to the minimum charge hike, rates would go up to .173 per 100 gallons beyond the first 1,000 gallons.

“As most citizens are aware, we are in the middle of plans to revamp our sewer system” stated Mayor Roger Gosney. “DNR has been gracious enough to allow us to implement the changes they require over time, as we have the money to pay for the expense. So it looks like we need to bump up our rates a little to stay in line with this DNR plan.”

The council indicated an agreement that both the water and sewer price increases were necessary to meet rising costs of providing the services while funding maintenance and upgrades.

“If we stay where we are at on the rates, we are going to be in trouble,” stated Alderman William Reckenberg.

He was highlighting the declining capital revenue fund that is projected to be at a deficit if current rates are retained.

“It is basic business,” stated Alderman Chris Feeney. “The city cannot operate at a deficit. Utility rates have to not only cover the cost of the service and the overhead, but there has to be something left over to pay for maintenance and future expansion and improvements.”

He pointed to the new water line being installed on Market Street. The city is replacing an old four-inch cast line with a new six-inch PVC line to improve service and eliminate growing maintenance and upkeep expenses.

The second rate increase, proposed for implementation in September of 2007, would add another five-percent to the bill, making it $39.24 for that same 5,000 gallons. Water charges would go up to .506 cents per 100 gallons used beyond the $19 minimum of 1,000 gallons.

The city compared the rates to fees charged by neighboring service providers as provided by city treasurer Michele Drummond.

The Scotland County Consolidated Water Supply District #1 charges $44 for 5,000 gallons. Customers in Lancaster pay $44.50 for the same amount while Clark County rural water customers pay $40.50. Residents of the city of Kahoka get the biggest bargain, paying just $21.60 per 5,000 gallons. Queen City residents pay $28 for the same amount of water while Edina will be raising its rates in June to $34.50.

The proposal was for discussion purposes only. The rate hike will be considered for a vote at the June meeting.

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