Tuesday, August 15th, 2006
By Timothy Cox
Delay in water fee decision
Celina City Council members want more time to consider a proposed increase in water rates that would boost prices by more than 30 percent within the next 16 months and about 50 percent over the next five years.
Council members passed first reading of an ordinance approving the rate increases but handed the issue off to their utilities committee for further discussion. Council members could end up tweaking the administration's proposal, which they say is necessary to maintain current operations and pay the operations costs of a new treatment process to be added to the existing treatment system.
As proposed, the ordinance calls for an immediate 15 percent hike in water rates followed by an additional "estimated" increase of 15 percent Jan. 1, 2008. The exact amount of the second price hike would be determined after a cost-of-service study to determine the city's actual costs to produce treated water. Furthermore, the proposed ordinance calls for annual inflationary increases of 3 percent annually beginning Jan. 1, 2007, for the next five years.
Based on those numbers, current water rates would rise by 52 percent over five years.
Even if approved as proposed, city residents and rural water customers still would face another round of rate increases that will be necessary to cover the costs of constructing the new treatment facility and buying the equipment to run it. Those costs won't be known until early next year when engineering and design of the new facility is completed, Safety-Service Director Jeff Hazel said.
Although the currently proposed rate increases would not cover construction of the granular activated carbon (GAC) treatment facility, it would cover the operational costs of the additional treatment process. Those costs - based on pilot testing - are estimated at $330,000 annually.
Council members expressed various concerns about the proposed rate increase.
Councilwoman Angie King said she understands that many people are facing tight finances in the wake of rising property taxes, spiraling fuel costs and other issues.
"I know this is going to impact families," King said, suggesting that increases could be broken into multiple smaller hikes so the extra financial burden doesn't hit all at once.
Councilman Rick Bachelor said he doesn't like the uncertainty of the second "estimated" 15 percent increase.
"There's no way I'm voting on something like that," Bachelor said.
The additional revenue is needed by the water department not only to run the GAC treatment, but also to cover the rising costs of chemicals and other supplies used in the treatment process. The water department also recently hired two new full-time employees because the plant is now operating 24 hours per day and the GAC testing requires round-the-clock monitoring.
Additionally, city officials point to the water fund's $62,000 reserve balance, which they say would not be enough money to cover a catastrophic water main break or equipment malfunction.
The GAC process is being added to the system to bring the city's water into compliance with EPA regulations. The city has until November 2007 to lower its levels of trihalomethanes (THM) in the water to acceptable levels.
THMs form when the organic material in the water drawn from Grand Lake reacts with chlorine added to the water during the treatment process. The GAC is a proven technique that absorbs the organic material from the water.
City officials plan to build the new facility on the site of the Blue Goose, the city's failed power plant that is to be torn down soon.
Councilman Ed Jeffries wondered what the cost of the new treatment would be and how it might affect water rates. Jeffries also questioned how higher water rates might affect the city's ability to attract new industry.
Hazel said there is no way to accurately determine that until firm plans are in place.
"I didn't want to guesstimate on that," Hazel said.
No date was set for a utilities committee meeting to further discuss the issue.
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