City Council Moves Forward With Consumption Based Sewer Rates – Proposed revenue increase will save conservation-minded residents money
December 9, 2015: At the Monday night meeting of the City Council an ordinance was introduced that would change the way in which residents and businesses would be charged for their sewer utility. Known as consumption-based pricing, this move would distribute the financial responsibility for the utility more equitably among those who use it. Consultant Jonathan Varnes from Wildan Financial, the rate study advisor hired by the City, gave a detailed presentation describing the factors considered with this type of rate structure. These factors include both flow and strength attributes. Some costs, such as administration, would be shared equally among all users and other costs would be distributed among ratepayers based on their use of and impact to the sewer system which includes lift stations, sewer lines, and the treatment plant itself.
The proposed consumption-based rate structure is established by looking at users’ average water usage over winter months November-February. This provides a fair look at users’ impact to the sewer system without penalizing them for water usage that occurs over summer months to water lawns and gardens. Residential new users without an established history and those who are sewer-only customers would be charged a flat rate unless they could provide proof that their use was outside of the average for their customer class.
This new rate structure would not signify a rate increase for all users. In fact, nearly 50% of users’ rates would stay the same or even decrease. Consumption-based rates are especially beneficial to seniors and singles who typically live alone and have a small impact on the utility system.
The need for a revenue increase was determined following a revenue sufficiency analysis that was performed in 2013. It took a look at long-term needs of the system along with debt payments being made to the State’s Revolving Loan Fund. This analysis showed clearly that the Sewer Fund was in dire trouble and that extraordinary rate increases were needed to solve the financial stability of the system and this was simply not feasible for the community. City leaders began a months-long process of negotiation with the State Water Resources Control Board which ended with the City winning an unheard of termination of interest on the loan. This win saved the ratepayers $14.6 million dollars over the life of the loan and renewed the ability of the community to support the system.
However, even though the interest on the loan has been abolished and the City has worked hard to receive several large grant awards recently totaling approximately $3.5 million, a modest revenue increase is still needed to support the long-term financial health of the Sewer Fund. Establishing the health of the sewer infrastructure and of the Sewer Fund, which is a nonprofit, is one of the priority goals of City leaders.
Crescent City sewer utility consumers will see a Proposition 218 notice in their mailboxes by the end of the year. This notice explains the proposed rate structure in greater detail and also gives information on how to protest the change if users decide to do so. More information, including a proposed rate calculator and the entire presentation by Wildan Financial, will be found on City’s website at www.crescentcity.org beginning next week. Additionally, the City plans to hold a town meeting on the subject on Wednesday, January 13, 2016 at 6 p.m. at the Waste Water Treatment Plant located at 210 Battery Street. A follow up tour of the facility for those interested will occur on Saturday, January 16, 2016 at 10 a.m.