The Oak Ridge City Council on Monday approved water and sewer rate increases that will take effect January 2014 and January 2015. (File photo)
There was much opposition online, and in phone calls to city hall, but few public objections to back-to-back utility rate increases at a Monday night Oak Ridge City Council meeting.
The Council voted in two separate 6-1 votes to raise water and sewer rates in January 2014 and again in January 2015. The increases range from 8 percent to 15 percent.
The new rate hikes, which will be considered on second and final reading in October, would result in water bills that could go up by a minimum of $1.35 per month in January 2014 and then another $1.19 per month in 2015. Sewer bills would increase a minimum of $2.78 per month next year and then rise another $2.13 per month the following year.
The rates were last raised this past January.
Compared to current rates, the combined minimum increase by January 2015 would be $7.44 per month. The change for a resident using 4,000 gallons per month would equal $13.64, according to information provided by the city staff.
About 36 percent of the city’s utility customers are billed at the minimum rate, and 65 percent use 4,000 gallons or less per month, Oak Ridge Finance Director Janice E. McGinnis said in a memo to City Manager Mark Watson.
Oak Ridge City Council members said they recognized that paying utility bills can be a stretch for some, but those who voted to raise the rates suggested the increases were relatively small and the city’s utility rates are reasonable. They said this “day of reckoning†had been put off earlier.
“I don’t see that we have any real viable option for the rate increases,†Council member David Mosby said.
Council member Trina Baughn cast the only votes against the increases. She said the two increases approved on first reading Monday are the third and fourth recent rate hikes and would make the city uncompetitive economically.
“If we approve this, we are basically sticking it to the taxpayers,†Baughn said. “The notion that we have no choice is patently false.â€
Oak Ridge resident Mike Mahathy said incomes are going down, not up, and the rate increases are “criminal.”
“There (are) many, many people who are against this,” Mahathy told Council.
The city staff said the increases are required to continue to operate and maintain the utilities, perform necessary improvements, and meet contractual and debt service obligations.
“Cash levels have been seriously hampered due to reduced sales volume, particularly in water, due to the unusually high rainfall this summer, and are insufficient to finance ongoing obligations without these rate increases,†McGinnis said.
McGinnis said the water rates will fund the first phases of $14.7 million worth of projects at the Water Treatment Plant through 2019. The U.S. Department of Energy, which is an Oak Ridge utility customer, will fund about half of those costs, McGinnis said.
Meanwhile, the wastewater rates will fund debt service for capital projects required to comply with an order from the U.S. Environmental Protection Agency that requires the city to repair all sewer system overflows by September 2015. That order will require roughly $23 million worth of projects in the next two years, McGinnis said.
In June, Tennessee officials approved a $18 million loan for Oak Ridge under a state program that will help the city comply with the EPA order. McGinnis said officials have estimated the city might have to borrow up to $3 million more for capital projects.
Also Monday, Council approved an electric rate increase of about 2.63 percent that is effective starting Oct. 1. It includes a 1.5 percent increase from the city’s power generator, the Tennessee Valley Authority, and a 1.13 percent inflationary increase for the city.
The monthly bill for the average residential household that uses 1,055 kilowatt-hours of electricity will increase by $3.60, McGinnis said. The monthly bill for the average small commercial customer that uses 1,800Â kilowatt-hours will go up by $5.33.
McGinnis said TVA’s last wholesale rate increase was in October 2011. The city’s last inflationary rate increase of about 1.9 percent was effective Oct. 1, 2010.
McGinnis said the inflationary adjustment will help cover the city’s capital, maintenance, and operational costs.
“Like the waterworks system, declining consumption from weather, conservation, and lack of system growth has hampered electric system revenue generation,” McGinnis said. “Without system revenue growth, inflationary rate increases will be necessary to maintain sufficient cash levels to operative and maintain the infrastructure of the electric system.”
See the Oak Ridge City Council meeting agenda here.
Note: This story was updated at 9:35 a.m.
Dave Smith says
City staff: “The increases are required to continue to operate and maintain the utilities, perform necessary improvements, and meet
contractual and debt service obligations.”
David Mosby: “I don’t see that we have any real viable option for the rate increases.”
Most other council members: “The increases [will be] relatively small and the city’s utility rates are reasonable.”
Trina Baughn: “The notion that we have no choice is patently false.”
Patently (adj.): easily recognizable, obvious
Delusional (adj.): relating to an idiosyncratic belief or impression that is firmly maintained despite being contradicted by what is generally accepted as reality
n crossno says
Because we use less…we should pay more. Does anyone else see a problem with this!
Dave Drum says
Exactly.
Andrew Howe says
It took me a while to figure out the crux of the “problem”, but here’s what I came up with eventually.
It’s a ‘communal resource’ that is built upon a very large infrastructure. The amount of flow through the system probably has less to do with the system’s degradation than other factors like earth shift, new development, weather, tree falls, etc. I’m just guessing at that.
In other words, the system will cost nearly as much to supply water to five houses at the end of the line as it would to supply water to everyone along the line.
If we could shrink the infrastructure as usage drops, we’d probably be able to maintain a static price, but we can’t, so we’re stuck with this shared system.
But that’s based on the current way of charging. There are likely more creative ways to charge, such as charging more for people who live at the end of the line. But folks out at the end wouldn’t like that much either!
Trina’s not delusional, because there are other means to reduce the burden – but people wouldn’t like them much more than they like the rate hikes, as it would detract from other programs that people enjoy about as much as they enjoy low water rates. Or so I gathered from a personal conversation with a council member.
In other words, something had to give and council felt more people would rather pay more for the water than see other programs get under-funded.
They may well be right. What’s needed in cases such as this, is actual public opinion statistics. A bit of guess work goes into running any organization, so minimizing that is key to planning. The more solid data that can be given to the managers, the better chance they’ll make decisions that please the majority of people.
I think the city should look into the concept of polling the constituents, because online mechanisms now make that a simple task.
TJ Garland says
If you look at your water bill, you will notice it is measured in units of a thousand gallons.
I am told by the city staff that 2010 gallons used is billed as 3000 gallons. The city rounds up to the next thousand.
This to allow loss in the water lines. In effect many customers are overbilled 25 to 100%.
Andrew Howe says
Rounding up just makes it worse, if that’s the case. And would seem to be pretty much horribly unethical.
I don’t think the meter is actually read in person each month. That can also be a good or bad thing, depending on usage and how they do the estimations.
Big ole ‘harrumph’ from me! LOL.
johnhuotari says
Interesting point about the very large infrastructure. I may have to ask how much the long, narrow nature of the city adds to utility costs.
Janice McGinnis said the city has 248 miles of water lines and 261 miles of sewer lines, but I don’t know how that compares to other cities.