In introducing the rate study to the Henderson City Council during its workshop session on Monday, March 24, 2008, Interim City Manager Ed Wyatt called it a “long awaited report”.
The recommendation of a 7% increase in water rates and a 10% increase in sewage rates came at the conclusion of the presentation of the rate study report.
The rate study was originally solicited by the previous city council.
Wyatt said that he previous council wanted to develop an “equitable” water and sewer rate as well as to be more sensitive to the outside [of the city] rate for water and sewer which is currently 250% of the inside the city rate.
The interim manager said that there was a need to recognize that the water system and the sewer system are distinct and that each should be self-sustaining.
Wyatt noted that industrial users were cutting back on consumption, taking away from income.
Assistant City Manager Frank Frazier, whose duties include water management, then took the council through the report.
Frazier said that upcoming capital projects, a loss of industrial customers, regulatory items such as the state Special Order of Consent to repair the sewer collection system, and “considerable” increased chemical costs will cause an increase in the budget for water and sewer.
The assistant city manager noted that there are $250,000 in unpaid water bills every year.
Even with grants, Frazier said, there must be matching funds to make the applications competitive. He said that the city will have to come up with the money.
Frazier listed ways to keep water/sewer costs down, including:
* Attracting new customers
* Keeping rates competitive
* Continuing to study efficiency to see where money can be saved
* Using a collection agency to pursue uncollected bills
* Using the state’s debt set-off program to collect owed money
* Use of a “round up” program where customers voluntarily contribute to a fund to help those in need pay their water bills
Frazier then looked at comparisons between Henderson’s water rates and those of comparable municipalities.
Council member Mike Rainey asked how Oxford could sell water more cheaply than Henderson when Henderson supplies the water. Frazier responded that some towns may subsidize their water out of general funds. He also said that Oxford’s operational costs may be less than Henderson’s.
Frazier took the opportunity to stress the need to upgrade Henderson’s plant to where it is more efficient.
Among proposed changes, Frazier recommended that Henderson use a more “uniform” rate structure rather than the one currently in place where less per unit water is paid the more water is used. He also recommended that the outside rate be phased down over the next four to five years.
Wyatt commented that it was clear that North Carolina Governor Mike Easley wants to centralize water systems to make water more available to those who have made no major capital outlays.
The interim manager speculated that a call for water conservation would cause rates to rise because of reduced consumption.
Dr. Mike Aquesta of Earth Tech then took the council through the rate increase. He said that a rate increase of 7% for water and 10% for sewage would increase the average monthly user’s bill by $3.50 a month.
The average water customer in Henderson uses 700 cubic feet of water per month.
Aquesta said that it is currently unknown how much revenue will be needed since the budget is not yet complete. He said that the rate needs to be looked at after the budgets are completed to see how much is needed to balance the budgets.
When asked by council member Mike Inscoe how much rates have increased from year to year, Assistant Finance Director Sandra Wilkerson said the the increase has been 3% on average.