Troy water, sewer rate increases recommended

Published 10:36 pm Tuesday, August 28, 2018

The Troy City Council once again reviewed recommendations to increase water and sewer rates beginning in January 2019.

Sarah Chandler of Jackson Thornton addressed the council members in their executive committee meeting Tuesday to detail the need for new rates in the city.

“When determining whether to raise rates, you’re looking at revenue stability and sufficiency, this isn’t about making a profit,” Chandler said.

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In fact, Chandler showed that the city actually didn’t bring in enough revenue to cover expenses for water service last year, falling just over $303,000 short of the necessary $3.9 million in revenue.

In short, the city ended the year 8 percent under-recovered from the cost of service for water. Most of that shortfall, she said came from insufficient residential revenue. “They’re not paying their fair share,” Chandler said.

Statistically, Chandler mapped out how residential revenue was only meeting 59 percent of expenses for water, while commercial revenue actually exceeded expense by 30 percent and public and housing revenue exceeded expense by 51 percent each.

Chandler said those percentages sound large, but the monetary amount is relatively small based on the fewer customers that fall under those rate structures. Yard meter users also fell short of the needed revenue at 81 percent and rural revenue only reached 67 percent.

Establishing fair and equitable rates among the different rate classes is another important part of managing the system, Chandler said.

In order to eliminate the shortfall, the firm recommended the gradual elimination of the 3,000-gallon minimum usage threshold for residential, rural and yard meter customers only. Currently the city charges a flat rate of $10 per month, which includes up to 3,000 gallons of water usage. Additional charges apply for each additional 1,000 gallons used, starting at $1.25 per month.

Under the plan, customers during the first year would receive 2,000 gallons of water for the $10 flat charge, then pay $1.25 per 1,000 gallons up to 10,000 gallons, with the additional step charges for additional usage remaining the same. The average residential customer usage in Troy is 4,600 gallons per month.

The change would generate approximately $243,000 in revenue over the three-year period.

Wanda Moultry, District 5, stated her concern that the new setup would charge residents more money for less water usage.

Chandler said Troy’s rates are already “very inexpensive” and Mayor Jason Reeves said many other cities have already phased out “giving away water” or are in the process.

Chandler said the reason for giving that amount of water stems from a time period that is long in the past.

“That was originally to convince people to use the line instead of wells,” Chandler said. “That is no longer an issue because most people are not going to try to go back to a well.”

At the end of three years, Chandler said residents would only be paying up to $3.75 more per month for water.

In addition, the firm recommends increasing the basic residential customer sewer charge by $6 per month over three years and the commercial customer sewer charge by $4 per month over three years. For residential customers, the basic sewer charge would increase by $2 per year, from $10 per month to $16 per month. The change would generate approximately $392,000 in additional revenue over the three-year period.

The rate increase comes for the same reasoning as the water increase with a similar shortfall in revenue.

The firm recommended no changes to the electric rate structure, citing anticipated expense reductions related to the city’s contract with a new provider.

The city’s last increased electric rates in 2012 and sewer and water rates in 2013.

Council members took the recommendations under advisement but took no action on the proposal.

During the regular meeting, the council:

• Awarded a bid project to do drainage work, water line and sewage improvements, and resurfacing on portions of Adams and Boyd streets. The bid was awarded to S.A. Graham Construction for $486,000 of which $400,000 will be provided by ADECA. The City will be responsible for the remaining $86,000 but Utilities Manager Brian Chandler said that the City could make changes during the project to reduce the cost by 10 percent.

• Heard from Margie Florence Barrow about concerns of alleged abuse at the Boys and Girls Club of Pike and Surrounding Counties.

• Approved an engineering contract with CDG Engineering.