September 12, 2013WOLFEBORO — Following up on the presentation made on Aug. 7, Public Works Director Dave Ford and Keith Pratt, president of Underwood Engineers, presented selectmen with recommendations for setting 2014 water and sewer rates on Sept. 4.
As expected, no increases in base rates were proposed but several potential adjustments to the rate structure were recommended.
Pratt first reviewed the six-year projections made on Aug. 7, which showed that without rate increases both water and sewer departments should produce surpluses between now and 2018: $346,000 for water and $65,000 for sewer. While this is good news, the surplus funds generated will not be enough to make a dent in the cumulative operating deficit of $800,000 in the sewer department nor adequately fund scheduled future capital improvements in both water and sewer departments.
Five options were offered to increase revenues without increasing base rates:
1) Increase the seasonal users charge to $95 per quarter for both water and sewer use.
2) Charge an administrative fee of $15 per quarter for each "deduct" meter. Deduct meters measure water used in activities like watering lawns that do not put water into the sewer system.
3) Charge for sprinklers and private hydrants.
4) Reduce the amount of water in the base meter rate from 5,000 gallons to 4,500 gallons per quarter.
5) Change the meter structure to charge more for larger-diameter water connections.
Pratt then charted the revenue results and impact on users of implementing some or all of these changes through three options:
Option A. Would increase the seasonal charge and reduce the included water for water and sewer users to 4,500 gallons and add the $15 per quarter deduct meter fee. These adjustments would increase the six-year surpluses in water from $346,000 to $595,000 and in sewer from $65,000 to $203,000.
Option B. Would increase base meter rates for larger connections, increase the seasonal users charge, charge $350 a quarter for private hydrants, and eliminate included water in the base rate but reduce the water consumption rate to $6.30 from $10.52 per 1,000 gallons and the sewer rate to $11.84 from $16.15 per 1,000 gallons while adding the $15 per quarter deduct meter fee. The changes would yield approximately the same revenue increase as Option A.
Option C is a variant on Option B and again would produce the same revenue increase. The difference are that 3,000 gallons of water would be included in the base rates and the water consumption rate would be reduced to $7.84 while the sewer consumption rate would be reduced to $13.77. In addition to the $350 per quarter charge for private hydrants and $50 per quarter charge would be added for sprinklers.
Even though the revenue results from all three options are the same, the impact on users is significantly different. Option A would increase total cost for the minimum user by 1 percent and for the average user by 5 percent for water and 2 percent for the minimum user and 6 percent for the average user.
The impacts for Options B and C are much higher:
For minimum water users the cost would be 48 percent higher for Option B and 20 percent higher for Option C; for minimum sewer users the cost would be 90 percent higher for Option B and 36 percent higher for Option C.
For average water users the cost would be 12 percent higher for Option B and 3 percent higher for Option C. For average sewer users the cost would be 30 percent higher for Option B and 13 percent higher for Option C.
Ford and Pratt recommended adopting Option A, which would keep base and consumption rates the same, reduce included water by 500 gallons per quarter, increase the seasonal charge and add a $15 per quarter charge for deduct meters in 2014.
The board accepted the recommendation in a 5-0 vote.
Selectmen had decided on Aug. 7 to begin monthly billing for both water and sewer on Jan. 1, 2014, which makes implementation of Option A more complicated, since the changes will be introduced while users are being transitioned from the current quarterly billing system.
After some discussion with Tax Collector Brenda LaPointe, it was agreed to send a letter with November quarterly bills explaining the transition in January and put off imposing the $15 deduct meter charge until April, when the conversion from quarterly to monthly billing will be complete. Separate letters will be sent to seasonal users on the $95 per quarter charge.
Sewer funding delay
On a related matter, Finance Director Peter Chamberlin came up with a six-year plan to eliminate the current one-year lag in applying revenues to sewer fund debt. The problem began in 2004 and the untransferred balance currently stands at $771,284 – a situation that complicates budget planning and that Selectman Linda Murray wanted resolved.
Chamberlin said he will create a $771,284 receivable for the sewer fund and pay it down with a declining amount each year from state receipts, beginning at $143,858 in 2014 and ending with a final payment of $77,250 in 2019.