Commission urged to raise utility rates

Details

Published on Tuesday, 07 February 2012 16:50

Dale Denwalt
Daily Elk Citian

The City of Elk City should raise its water, sewer and garbage collection rates, an engineering firm told the City Commission Monday.

Tom Gould with HDR Engineering presented the commission with his study on what the city charges customers for those services, and recommended raising those rates over five years.

The commission ultimately decided to look further into the study and ask for public comment. A public hearing on the proposal is set for March 5.

HDR began looking into the city's utility rates last fall and discovered that current revenues would not keep up with expenses.

"One of the problems that you'll see in a lot of utilities is the maintenance of the existing infrastructure is underfunded, so we wanted to make sure we were providing proper funding for these utilities to take care of the facilities that we have in place today, meet all of our debt obligations and maintain competitive rates," Gould said.

WATER

By 2016, the city would come about $300,000 short in maintaining its water operation and paying off the public debt related to the utility.

"We don't have very much funding available to take care of the existing infrastructure," said Gould. "At the present time, you're not meeting your debt service coverage requirements."

The plan would raise the minimum water bill to $9.50, and increase the typical home's charges by about $1.43 per month. 

In addition to raising the rates, Gould recommended that the water fee structure be changed. Currently, there are nine different rates based on how much water a customer uses. HDR's plan would consolidate that into four levels, or blocks.

"Now, in our discussions with the commission and the staff, we concluded that we have probably too many blocks. It was too confusing, and it really wasn't achieving much by having all these blocks," Gould said.

He contrasted the proposed rate with other communities in the western Oklahoma Interstate 40 corridor, and showed that Elk City residents would still have a lower water cost than those in Sayre and Weatherford. Clinton customers would pay about seven cents less.

WASTEWATER

Gould also recommended increasing the base charge on wastewater, or sewage rates from the current $3.50 to $4.50 for residential customers. Commercial customers would see a $1.70 raise in their base rate beginning next year.

Similar to the water rate structure, the wastewater cost structure, which is based on the amount of wastewater emptied into the system would also shift.

"We've simply restructured it a little bit to better match up with the water utility," Gould said.

Overall, if HDR's recommendations are followed, the average customer would pay approximately $8.34 next year on their wastewater bill. Currently, the average cost is $7.70.

"I do a lot of work around the country and I have to tell you, I think that's the lowest wastewater rate I've seen probably in the last 10 or 15 years," Gould said.

That reason is because of the way Elk City treats is wastewater.

"Compared to some of your surrounding communities, you're significantly less than those communities," said Gould.

SANITATION

Customers using a city-owned trash bin would see their rates increase by $2 per month starting next year and increasing over the next five years. By 2016, the cost per household will have risen to $11.10.

Commercial customers using a roll-off trash bin would also see their rates rise.

Compared to customers in Sayre, Clinton and Weatherford, Elk Citians would be paying less per month.

"We think we've done a good job of making the cost-based rate while keeping it competitive," Gould said.

TOTAL UTILITY BILL

If the HDR recommendations are fully implemented, the average Elk City residential customer would pay $40.24 in the first year of increases, up from $36.17.

Over time, the rates would rise by $9.

"We think we've developed a financial plan that does a whole lot of good things for you in terms of paying for infrastructure but also keeping your rates competitive and transitioning your rates very smoothly over that five-year period," Gould said. "There's a little more funding up front the first year, but once you get past that bubble, then it smooths out as you go through time."

He also discussed the change in a customer's minimum bill, which is charged to those who use none or very little of the city's services. Currently, the least amount anyone can pay for all the utility services is $21.50.

Next year, the proposed rates would increase by $5, and by another $2 by 2016.

"Ultimately, the impact of the minimum bill should be fairly stable for customers," Gould said.

The average total utility bill next year, should the proposals be implemented, would be about $8 less than Sayre customers, and lowest along the I-40 corridor.