Opp’s sewer, water charges going up $8.50 in April

Published 12:20 am Wednesday, January 18, 2017

Opp Utilities customers will see an $8.50 increase in their bills come April – the first of a series of increases headed their way.

At Tuesday’s Opp Utilities Board meeting, Jim Marshall, of Jackson Thornton Utilities Consultants, reviewed rate information that presented to board members in 2014. No rate action was taken after the recommendations were made.

Marshall told the Utilities Board, which consists of Chairwoman Becky Bracke, Skipper Spurlin, LaVaughn Hines, Charles Willis and Joe Richburg, that they need to have enough money coming in to operate sufficiently, have revenue to reinvest in infrastructure and pump into the city’s general fund.

However, the rates also need to be fair and equitable, which means that everyone should be paying their fair share. He also said the board needs to consider affordability and ability to pay. Numbers presented were based on fiscal year 2013.

The water system needs $1.24 million in revenue to operate, he said.

Utilities Director Stacey Parker said the number would be approximately $24,000 more currently with changes to the fire hydrant rental.

The water system only collected $868,712 in FY2013, which meant the water system was underfunded by $400,000.

The sewer side looks much worse.

It needed $1.45 million to operate, but only collected $687,707, which means that it had shortfall of nearly $770,000 in FY2013.

Marshall said the utilities department had a long way to go to get to full recovery, which means they bring in what they need to cover their costs.

“That hole wasn’t dug overnight,” he said. “I suggested a tiered approach to full recovery.”

Marshall said he started working with the utilities department in 2006 and made some progress. He said they saw positive rate action in 2008, and the last rate increase was in 2011.

Additionally, the utilities department went from giving the city $1 million a year four years ago to $2 million a year for payments in lieu of taxes.

The board acknowledged if they didn’t pass on some rate action to the consumer, they would eventually not be able to send money to the city.

The electric department operates at 105 percent recovery, which essentially takes care of the shortfall in the water department, but still leaves the three systems in a $776,000 shortfall.

Willis said that it had been a mistake for them to cover the water and sewer from other places.

Based on FY2013 numbers, the electric department is at 105 percent recovery; water at 68 percent; and sewer at 47 percent. Marshall said to get to full recovery, the system would have to more than double its current rates.

Board members decided on a four-year plan that would start with a customer charge increase on the April bill of $2.50 for the water and $6 for the sewer. They will also implement another $8.50 increase on Oct. 1.

The increases are expected to create an extra $199,000 in two years on water and $385,000 on sewer in two years.

Marshall said that since the board is setting the increase as a customer charge it’s fixed revenue.

With the increases it will put the sewer system at 74 percent recovery and the water system at 84 percent recovery.

In two years, the board will commission another study to see how implementation based on FY2013 numbers has helped the recovery.

“No one wants to go up,” Bracke said. “Sometimes in politics, you let things get in your way of making business decisions. I don’t want to be that way.”

Hines said people are terrified of getting their light bills.

“This is really, really hard,” Bracke said. “It breaks my heart, but we have to run this like a business.”

Parker said that it will make accounting and budgeting easier.

He also told the board that the city lost out on a Community Block Development Grant last year because their rates were considered too low.