Selectmen approve $6 increase in water and sewer fees
Board also approves reallocation of overheads to strengthen sewer fund
August 25, 2011WOLFEBORO — When water and sewer rates were increased in 2009, to take effect in 2010, the long term plan was to focus on rate per gallon increases for both water and sewer services every other year. The increases were needed to cover the bonded cost of water improvements and anticipated higher costs for effluent disposal.
In turns out that the five percent increases implemented then did not produce as much revenue as anticipated, so for 2012 the town is taking another approach. Rather than increasing the rate charged for each gallon, the town is increasing the base service fee charged each quarter to water and sewer users.
The base fee includes an allowance of the first 5,000 gallons used for both water and sewer services. Above 5,000 gallons the customer is charged at a rate of 1.052 cents per gallon used for both water and sewer.
Public Works Director Dave Ford had presented historical data for review by selectmen on Aug. 3, along with an analysis and recommendations by consultant Weston & Sampson. On Aug. 17 selectmen voted unanimously to approve the recommended increases, which will take effect Oct. 1 and show up the customers' quarterly billings beginning Jan. 1, 2012.
The Weston & Sampson study shows a steady decline in the number of gallons of water sold in the period January-June since 2006. In 2006, a total of 58,039,290 gallons were sold. By 2011 that total had dropped to 48,358,455 gallons.
Ford noted that this reduction was due in part to efforts to educate customers on ways to reduce water usage, including providing kits to locate and stop water leaks. The increase in 2009 also led some large water users to implement water-reducing improvements, and the construction of new, water-efficient facilities at Huggins Hospital and the Kingswood complex has also reduced usage.
In the meantime the town itself has undertaken a range of capital projects aimed at improving water quality while reducing system water leaks and groundwater infilitration in sewer pipes. The water projects were paid for with bonds that need to be repaid by water users. (Sewer projects are paid for through property taxes.)
Rather than increasing the charge per gallon rate by five percent for both water and sewer, as originally planned, the town will instead raise the base service fee, which is the minimum amount all customers pay for both water and sewer services and is independent of the gallons used.
Of the 2,380 water customers, 2,093 (88 percent) have 5/8 to ¾ inch feed lines. The rate for those customers will increase from $54 per quarter to $60, an 11.1 percent increase. This will add $24 a year to the water bills of most users. There are also 230 seasonal users, who will see their annual charge go from $108 to $120.
For sewer users, the impact is similar. Of the 1,070 sewer users, 1,013 (95 percent) will see their quarterly base fee increase from $54 to $60. Since all sewer users are also water users, the addition of the $24 annual sewer fee increase will bring their total fee increase to $48 a year.
Weston & Sampson had recommended increasing the base fee from $54 to $65, but Ford and selectmen determined that a $60 rate was sufficient.
In addition to approving an increase in the base water and sewer fees, selectmen also accepted Ford's proposal for a change in overhead allocations between the water and sewer departments.
On an operating basis, the water department is already running profitably and the proposed increase will help keep it in the black. The sewer department, however, is running at an operating loss. The rate increase will help move the operation toward profitability, but, Ford argued, an adjustment in overhead allocations is also needed.
In the past, allocation of overhead costs was done equally between the two departments. However, the ratio of water to sewer billings is 70 percent water and 30 percent sewer. Adjusting the split in overhead to 70 percent water, 30 percent sewer would shift $36,000 in overhead from sewer to water.
Also in terms of actual work, four people are dedicated to water operations versus one for sewer work. In the past the allocation of crew costs has been 75/25 for water and sewer. Adjusting the split to 80/20 will shift another $21,000 in costs from water to sewer.
Both changes together, Ford argued, reflect actual operations while helping the sewer operations become profitable in 2012.
As with all four of the town's enterprise funds, revenues generated over costs are captured in a reserve fund used to make capital improvements. A capital reserve fund for the sewer department will help reduce the cost of capital improvements to property tax payers, who otherwise have paid for all capital improvements made to sewer lines and the wastewater treatment plant.