Staff
The Sweet Home City Council last week moved closer to deciding how it will adjust water and sewer rates this year.
The council did not change water or sewer rates last year. In discussing the issue in recent months, council members have grappled with historical precedents and local culture as they have sought to come up with a plan that would be as painless as possible for ratepayers.
The council met in a work session on April 13 to look at rate proposals. After discussing the initial proposal offered by staff, council members asked Public Works Director Mike Adams to bring rates back to the council outlining rates under different scenarios.
Councilors instructed Adams to provide rates that include only 300 cubic feet per month as part of the base cost of water and sewer service – instead of the 400 cubic feet customers currently receive.
At that level, the net result of most of the scenarios is that below 1,000 to 1,200 cubic feet of use would increase in water and sewer bills, while those using more than about 1,200 cubic feet would see a decrease.
Right now, the city provides 400 cubic feet of water per month for the base charge. Residents who use more than 400 cubic feet per month are charged a rate for each additional 100 cubic feet they use.
The current rate structure includes a base charge of $17.90 for water and $36.70 for sewer. Every customer using 400 cubic feet or less pays a combined charge of $54.60 per month.
For those using more, the city charges $7.48 per 100 cubic feet for water and $6.45 per 100 cubic feet for sewer. Each additional 100 cubic feet costs $13.93. A resident using 500 cubic feet is charged $54.60 plus $13.93, a total of $68.53.
This changes during the summer when the city locks in the winter usage average for each user. That way residents can water their gardens and lawns without paying extra for sewer service they won’t use as the water is soaked into the ground instead of the sewer system.
Councilor Jeff Goodwin has asked the council to eliminate the 400-cubic-foot base, a practice that drives up the commodity charge, which means that those who use more water subsidize those who use less.
Eliminating the 400 cubic feet may not be politically possible, but that needs to change, Goodwin said during last week’s discussion.
“Most people are going to see a large increase,” noted Councilor Bruce Hobbs.
Mayor Jim Gourley said he is concerned about changing the 400 cubic feet to 300 cubic feet. He is thinking about people using 600 cubic feet per month who already may have a hard time paying their water and sewer bill.
Goodwin said that as the rates decrease, people will begin using more water, further decreasing the need for a higher rate. The proposed rates don’t count on that being true.
If they did, he said, the proposed rates would be lower.
“The current rates are not where they would have been to begin with,” Adams told the council. Part of the increase in his proposed rates is catching up. He believes needed rate increases next year will be smaller.
The council about 18 years ago implemented the program to cushion the shock of rate increases for those who are on low or fixed incomes. Residents attended council meetings and complained about rate increases at that time.
Councilors were reluctant to eliminate the program, but they were interested in changing it from 400 cubic feet to 300 cubic feet as a compromise earlier this year. The councilors asked Adams to return with possible rates with the program set at different levels.
While the council’s discussion centered on 300 cubic feet, it did not settle whether to include utility expenses related to depreciation and “debt ratio,” an extra charge meant to help leverage loans for water and sewer projects. Both are related to future system repair and replacement.
Adams will return to the council during a regular meeting with scenarios that include different levels of depreciation and debt ratio, with the base charge including 300 cubic feet of water.
Including the collection of full depreciation and debt ratio, Adams is tentatively trying to raise revenue to meet expenses of $2.4 million for water and $2.9 million for sewer.
To do that, with the 300 cubic feet included, would reduce residential water rates to $5.44 from $7.48 and sewer rates from $6.45 to $5.05 per 100 cubic feet. The base charge would increase from $17.90 to $28.16 for water and $36.70 to $41.11 for sewer.
The increase in the base charge is tied to changes in collecting depreciation and the debt ratio. Collecting no depreciation would set the base charges at $20.92 for water and $34.22 for sewer.
At the top end, the price of water and sewer for 300 cubic feet or less would be $69.27, an increase of $14.67. For those using 400 cubic feet per month, bills would increase the most. They would pay $79.76, an increase of $25.16, the largest increase.
Those using 600 cubic feet would pay $100.74, an increase of $18.28. The size of the increase decreases at higher levels of consumption. At 1,200 cubic feet, residents would see a decrease of $2.36 per month to $163.68.
Under a scenario with no depreciation collected, the rate increase is much smaller at all levels. At 300 cubic feet or less, residents would pay $62.21, an increase of $7.61. At 400 cubic feet, bills would increase by $18 per month to $72.60. Those using 600 cubic feet would pay $93.38, an increase of $10.92 per month. Those using 900 cubic feet would see an increase of just 30 cents to $124.55 per month, while those using 1,000 cubic feet would see their bills decrease by $3.24 to $134.94. People using more would see larger decreases in their monthly bills.
“I’m not interested in 100 percent depreciation this year if we’re looking at a large increase to begin with,” Gourley said.
Adams said he thinks the council could comfortably collect 50 percent of depreciation for water and maybe for sewer and still be OK.
Hobbs said he would support going to 300 cubic feet and collecting 50 percent of depreciation as well as the debt ratio.
Goodwin said he would support that.
The councilors asked Adams to show them rates for different combinations of collecting depreciation and debt ratio, ranging from zero to 50 percent depreciation for consideration at the next regular council meeting on April 26.