According to Philip T. Driscoll, chairman of the administrative board, the board voted to increase its water rates by 11.88 percent for fiscal year 2014, which began on May 1.
The annual cost of water for an average residential customer that uses 60,000 gallons will be $353.60, an increase of $43.20. The annual cost for a customer using 100,000 gallons will be $618.80, an increase of $71.20.
The 2013 annual water bills, which cover water usage from the spring of 2012 to the spring of 2013, will be mailed to customers in mid-May, with payments due by July 1.
There will be two more rate increases for the subsequent two years — an additional 11.88 percent in fiscal year 2015 and 9.33 percent in fiscal year 2016.
The 2013 annual minimum charge, which includes 20,000 gallons of water, will increase from $111.60 to $131.20 for a residential customer with a 5/8-inch meter. The 2014 overage charges per thousand gallons of water will increase from $4.97 to $5.56 for usage between 21,000 and 60,000 gallons; from $5.93 to $6.63 for usage between 61,000 and 100,000 gallons; and from $6.60 to $7.38 for all usage over 100,000 gallons. The new rates are for water used from the spring of 2013 to the spring of 2014.
In addition to the increase in water rates, the District service charges, which are included in the minimum charge and are based on meter size and type, have been increased to reflect the higher cost of meters. The service charge for a typical residential customer will be $32, an increase of $9.
The District’s property tax rate will remain unchanged at 18 cents per $1,000 of assessed value; the district tax on property assessed at $400,000 is $72. Property tax revenue represents only 15 percent of the District’s total revenue.
Treatment plant work
According to the administrative board, the hike in water rates will help offset significant wholesale water rate increases from the City of Newport, which are necessary to fund the $84 million replacement of the Lawton Valley Water Treatment Plant in Portsmouth and the upgrade of the Station One Water Treatment Plant in Newport. Construction of the plants began in 2012 and is scheduled to be completed by the end of 2014.
Mr. Driscoll said the Rhode Island Public Utilities Commission (PUC) granted a water rate increase to Newport Water on May 1, which resulted in a 36.8 percent increase in the wholesale cost of water to the District. This increase included 17.7 percent for new debt service for the Newport treatment plants project and 19.1 percent to adjust the District’s wholesale rate based on a PUC-approved cost of service study.
In addition, a wholesale rate increase to the District of approximately 24 percent is expected to take effect on July 1, 2014 to fund additional debt service for the Newport treatment plants project. Mr. Driscoll said the board voted to use $347,000 of cash reserves accrued from prior water sales to offset the large increase in the wholesale cost of water in fiscal years 2014 and 2015.
Safe Drinking Water Act violations
William McGlinn, general manger and chief engineer for the District, said the treatment plant work is required to enable Newport Water, Portsmouth Water and the Navy to meet current and future federal Safe Drinking Water Act water quality standards.
Since 2000, the three island water suppliers have seen numerous violations of the act’s Disinfectants/Disinfection By-products Rule, specifically for trihalomethanes, or TTHMs. The rules for the maximum level for TTHMs will become more restrictive starting in 2013, making compliance by the island’s water suppliers very unlikely with the current state of the Newport treatment plants.
TTHMs, which the U.S. Environmental Protection Agency (EPA) classifies as a potential carcinogen, are a byproduct formed when chlorine used in water treatment reacts with organic matter in the raw and treated water.
Mr. McGlinn said the new treatment processes at the plants will also be better able to treat the water for seasonal taste and odor problems, which have been a source of complaints over the years.
In addition to the increased cost of water purchased from Newport, Mr. Driscoll said that the current and projected annual rate increases are necessary to help fund the District’s operating costs, capital improvements and debt service, including future debt service for a $1.2 million replacement of the District’s Union Street Pumping Station. Replacing the 47-year-old pumping station is necessary to increase pumping capacity, improve energy efficiency and meet current codes, he said.
A replacement meter reading system was installed by the District in fiscal year 2013, which will allow the District to read meters by radio and switch from annual to quarterly billing, as required by recent changes in state law. A replacement billing system will be purchased as part of the switch to quarterly billing in the fall of 2013. The new system will allow customers to view their water accounts and make payments online or by bank draft. Mr. Driscoll said quarterly water bills and the new billing system will help customers to better manage the increasing cost of water. The $1.3 million radio meter reading system and billing system were funded through a bond with the Rhode Island Clean Water Finance Agency. Mr. Driscoll said that because the project promotes water and energy efficiency, the loan was awarded with 100 percent principle forgiveness, meaning that the District does not have to pay back the loan.
The Board approved an operating budget of $3,303,914, which results in a 12.8 percent increase over last year’s operating budget. The Board approved a total budget of $3,577,280, which includes capital expenses, for an increase over last year’s total budget of 9.79 percent.
Mr. Driscoll said the Board is working hard to properly maintain and improve the water system, while providing fair and reasonable rates for customers and taxpayers. He noted there were no rate increases for fiscal year 2013.
The Board will continue to ensure that the cost it pays for wholesale water is fair and reasonable by working with Newport Water and intervening in water rate cases before the PUC as necessary, he said.