The Excelsior Springs City Council will hear a proposed almost 40% increase to water rates during their June 17 meeting.
City Manager Molly McGovern said, like last year’s sewer rate increase, this increase comes as a result of current rates producing less revenues than projected to cover expenses.
Approximately, 10 years ago, the City issued bonds to fund replacement of the sewer plant, replacement of sewer mains and water main replacements and extensions.
“With the sewer plant upgrades mandated by the United States Environmental Protection Agency through the Missouri Department of Natural Resources, we have a five-year operating permit that is subject to renewal, that stipulated improvements be made to change the sewer plant from an overland flow system to a mechanical plant in order to meet the new limits set forth in the permit,” she said. “It is our priority to provide water to our customers that meet quality, quantity and reliability standards.”
Once the city achieved those three things, she said they expect to provide the service at the lowest possible cost.
McGovern said about 10 years ago, the city used a consulting firm to complete a rate analysis resulting in a four-year rate plan that did not sufficiently produce enough revenue to cover expenses. The same study, she said, projected the number of gallons sold to grow annually.
McGovern said in reality, as the rate increased, customers used less water.
“Missouri Department of Natural Resources provides better guidance for rate setting that considers a simple math equation based on gallons of water used, the number of customers and the cost to provide that service to determine the rates they pass off to the customers,” she said.
The city does have some flexibility in where they weight the rate. She said the city can adjust the weight based on the gallons used or the number of customers.
Steve Marriott, director of administrative services, said the city must use care in determining this. If they place too heavy a weight on the number of customers, the base charge will burden residential customers unfairly in compared to local industries.
McGovern said the proposed monthly water rate increase represents a proposed $5.03 or 39.95% increase to the water base charge, a proposed $0.07 or 0.28% increase to sewer base charge and a proposed $4.58 or 23.77% increase to refuse.
“The rate change based on the number of gallons used is proposed to increase by $2.02 per 1,000 gallons used for water and $0.71 per 1,000 gallons used for sewer,” she said.
The average customer uses 3,000 gallons per month, McGovern said, which would change water by $11.09 or 38.24%, sewer by $2.20 or 3.85% and trash by $4.58 or 23.77% for a total change of $17.87 or 16.96%.
Other rate increases
In addition to the water rate increase, the Council will hear the proposed 36.93% increase to the water base charge, the proposed 6.64% increase to sewer rates and the proposed 23.77% increase to refuse during their July 17 meeting.
The city’s refuse provider asked for an increase last year to offset the rising cost of recycling and contamination in the recycled material, McGovern said, which they refused.
The city’s contract with their refuse provider expires next year. McGovern said the city decided to add this increase in hopes the city receives favorable increase during contract negations.
Marriott said the low sewer rate increase says they did a pretty good job of determining the correct sewer rate last year. McGovern said the formula, developed by DNR, allows them to plug in numbers and see who will be the most impacted by a proposed change. They try to not impact any one group more unfairly than the others.
“We don’t want to overburden anybody by any stretch of the imagination, but we have to break even,” she said. “We have to be able to keep the cash that we need to be able to do repairs … as we go forward.”
McGovern said city staff takes great care in determining a rate fair to all customers that will also allow the city to not lose money in providing this service.
She said Kansas City currently lies under a consent decree which allows the federal and state government to force certain upgrades to be made. Excelsior avoided the decree by performing the mandated upgrades in the expected time frame.
Marriott said the city must look forward and perform necessary upgrades and upkeep in order to stay ahead of “Big Brother” forcing the work.
McGovern said in the past cities deferred maintenance to keep rates low. Marriott said these deferrals kept the rates falsely low. When the EPA and DNR forced the cities to make these improvements, it caused rates to go up dramatically instead of gradually.
McGovern said the city determine rates that will cover the daily operating costs, the debt for improvements and also put something aside for improvements.
Given the cost of construction inflation, she said deferring maintenance will not always be advantageous.
“It’s really easy for your system to get into the mindset of prioritizing low rates and wait until something breaks before you fix it, but that is exactly how you compromise quality and reliability and ultimately risks a person’s health,” McGovern said. “No one wants to raise rates, but now we find ourselves playing catchup by having to make improvements that should have occurred years ago, and making the improvements that are called for today. “
Scott F. Honig, engineering unit chief with the Kansas City regional office of the Department of Natural Resources, worked with city officials in building the new sewer mechanical plant. In the June 29 issue of The Standard, he said DNR issues each city a state operating permit which specifies the limits of certain chemicals that can be released into waters that feed state waters as mandated by the EPA and state regulations.
The operating permits expire after a set time, he said, and the EPA may lower the maximum limits in accordance with its studies on a chemical’s impact on aquatic life and swimmers. DNR enforces those limits. When Excelsior Springs’ new operating permit came due, its old facility could not meet new government standards on ammonia limits.
“They were going to have to do some kind of changes to their treatment system to meet the requirements of their permit,” Honig said.
McGovern said she hopes this increase results in the revenue needed to avoid larges increases in the future.
“What we hope is next year … and future years will look more like what our (6.64%) sewer increase does now,” she said. “Because we’re back in positive cash flow.”
If approved by the Council, the rate increase will likely take effect in August.