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.”
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 1,800 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.