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Wednesday, May 27, 2015

Utility rate hike questioned

Wednesday, May 10, 2006

A proposed increase in utility rates for City of Greencastle customers prompted a former mayor to express concerns Tuesday about an estimated 57 percent increase in water bills.

"Word on the street is we need an explanation of what you have to do and why," Bob Albright told Mayor Nancy Michael and the Greencastle City Council during their regular monthly meeting. "You need to know how some of us feel."

City officials recently discussed the rate increase proposed by an Indianapolis consulting firm following a 10-month study of the city's water and sewer rates. That study provided a comparison of bills for Greencastle utility rates compared to other area cities, and noted that Greencastle's rates are among the lowest.

Albright said he also doesn't appreciate being compared to other towns and how much their customers pay for water service. This city needs to set the standard, he told Michael and council members John Lanie, Russ Evans, Mark Hammer, Tom Roach and Bob Sedlack.

"I will certainly be happy to show the budget to anyone. There is not a lot of maintenance expenditures factored in," Micheal responded, as she proceded to explain how the process for raising the utility rates evolved.

The rates have not increased since late 1997 despite increasing costs. The city also lost revenue when the Reelsville Water Authority brought its own wells on line in 2005 and stopped buying water from Greencastle.

Michael continued that in January 2005, the city realized it would be running into a deficit in the water department. The 2006 budget also shows the same dilemma.

"So we didn't just now find out about the deficit," Michael said.

A budget is always figured based on the amount of income expected, she said. And the deficit could have been huge at the end of 2005 if everything budgeted had been spent. But the utility departments did not spend the total budgeted funds on maintenance and improvements.

The study, based on 2005 financial information, showed that if the city had completed all of the sewer line extensions and replacements that had been budgeted, the department would have had a $420,708 deficit at the end of the year. It would take a 20 percent rate increase to make up that amount.

The study also showed that the water department would have had a $636,794 deficit at the end of the year, requiring a 57 percent increase in water rates.

Michael said the city cannot spend what it does not have, so to avoid ending up with those deficits, utility line extensions and replacements were not undertaken as they should be. That will eventually catch up with the utility system as aging pipes fail, she warned.

The new rate proposal is set up, she said, so the city can maintain its systems for five years, continue to make upgrades and buy time with the system that is now set up to be good for 20-25 years.

The average utility customer, a typical family of four that takes showers and does laundry, usually has a water rate usage of "7" on their bill. That equals to 700 cubic feet per month. That average customer is now charged a sewer rate of $31.50 per month. The proposed change increases to $37.80 per month. That is a $6.30 increase for sewage service. On the water side, that average customer pays a current charge of $14.49 per month. The proposed change would take that amount to $22.75. That's a difference of $8.26.

So the combined utility bill would increase $14.46. Don't forget to add the standard $10 per month for trash collection. That takes a monthly combined utility and trash bill from $55.99 to $70.55 for the average utility customer.

While those are the type of rate increases anticipated, they have not been approved and are subject to a public hearing by the city council. A rate schedule/bill analysis is available for public examination at City Hall.

City attorney Laurie Robertson Hardwick said Tuesday's meeting was the third time city officials have talked about the rate increase in a public session. And Mayor Michael, along with Sedlack, assured Albright they will discuss the information again and will accept public comment.



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