Posted 11/14/12 (Wed)
By Neal A. Shipman
Watford City residents and commercial businesses will be seeing upward of a 99 percent increase in their water and sewer charges come Jan. 1, 2013 as a result of a new rate structure that was approved on Nov. 5 by the Watford City City Council.
The city, according to Justin Voll, city council member, has annually looked at making adjustments to its water and sewer rates to reflect the increasing operation and maintenance costs associated with maintaining its existing water treatment facilities.
However, with the city preparing to begin purchasing more costly water through the Western Area Water Supply Authority (WAWSA) in the first part of 2013, the city’s current water and sewer rate schedule is not adequate to meet the new costs.
During Monday night’s meeting, the council agreed to begin a 2½ year phased increase of water and sewer rates that will see the base rate for residential customers remain at $19.60 per month, while the water unit rate would increase from $1.63 to $3.24 per thousand gallons used.
For residential customers, the new city sewer rates will reflect an eight percent increase in the base rate and a 98 percent increase in the sewer unit rate. Under the new 2013 rate schedule, residential customers will see their base rate increase from $18.57 to $20.06 per month and their unit rate increase from 79 cents to $1.56 per thousand gallons of water used.
Commercial businesses will be the hardest hit by the new rate structure as they will see their base rate increase from $19.60 to $30.77 per month, a 57 percent increase. Plus the water unit rate for commercial businesses will increase 99 percent, rising from $1.63 to $3.24 per thousand gallons of water used.
Likewise, commercial business customers will see a substantial increase in their sewage rate with the base rate increasing from $18.57 to $36.77 per month, a 98 percent increase, while the unit rate will be increasing 98 percent from 79 cents to $1.56 per thousand gallons of water used.
According to Peni Peterson, Watford City auditor, the base rate for the new water and sewer charges does not include any water usage.
As part of the process to set the new city water and sewer rates, the city hired Advanced Engineering to conduct an analysis of its existing rates and to present a recommendation to the city council as to what the new rate structure should be.
“The new rate structure reflects the city’s need to cover its operating expenses, the debt service as well as the cost of purchasing water through WAWSA,” stated Steve Burian of Advanced Engineering. “It also needs to provide a 15 percent return for the city’s Capital Improvement Plan and provide for 90 days of operating reserves.”
According to Burian, the biggest factor that is driving the cost of the city’s water and sewer rates will be the increased cost of the water from WAWSA, which is estimated to be in excess of $4.50 per thousand gallons.
“We are recommending that the city begin phasing in a rate structure plan that will have the city’s water rate the same as or higher than the $4.50 per thousand gallon cost,” stated Burian.
According to Burian, the new pricing structure needs to take into consideration keeping the rate as low as possible for the lower volume residential users, such as for people on fixed incomes, while the rate would go up as people used more water.
“Should we be at the $4.50 level,” asked Brent Sanford, Watford City mayor.
“I’m comfortable with a rate structure that has a constant minimum with volume increases,” stated Burian.
But, according to Burian, even with the new rates, the city will be deficit spending in its water account unless it is willing to make the total increase needed immediately.
“We, the Water, Sewer and Garbage Committee, are looking at a hybrid approach that will take 2½ years to fully implement the rate increases to fully cover our costs,” stated Voll. “We’re getting a higher quality of water than what we had and the new rates are cheaper than if the city had opted several years ago to install a reverse osmosis system to its existing treatment plant.”
While the city council was willing to go along with the higher water rates, Sanford questioned Burian as to why Watford City had the highest sewer rates of the 22 cities that were included in the analysis.
“We are looking into that,” stated Burian. “It has to be how you (the city), is assigning costs from city hall as well as personnel costs to the sewer account. And it could be because towns with much lower rates haven’t been making improvements to their systems.”
While Sanford noted the city had to raise the sewer rates several years ago in order to get bonds for the new sewer lines, he was still surprised to see Watford City’s rates among the highest in the state.
According to Voll, another explanation is that, unlike Watford City, some cities are making their water and sewer departments self-sustaining and instead use more general fund dollars to keep their rates lower.