NEW ULM – Water and sanitary sewer rates are expected to increase over the next few years according to the recommendations of the rate study.
The New Ulm Public Utilities Commission (PUC) received a presentation and report on the New Ulm Public Utilities Water and Wastewater Tariff and Service Cost Design Study. The study was prepared by Short Elliott Hendrickson Inc. (SEH). Karen Cavett from SEH made the presentation.
The current water tariffs have been in effect since January 1, 2014, and the current wastewater tariffs have been in effect since February 1, 2013. Last year, the commissioners accepted a proposal from SEH to carry out a study service costs and tariffs for water. and sanitation services.
The purpose of the study is to review and analyze the current tariffs for water and wastewater utilities and to make recommendations for modifying the tariffs based on the cost of service allocation and revenue requirements. of public service.
The study provided recommendations to the utility for the implementation of tariffs to meet the needs of each system over five years and maintain operational stability and adequate cash flow.
The recommended changes for water and sewer depend on the type of customer. In New Ulm, utility customers are divided into five categories: residential, small commercial, large commercial, municipal and industrial. SEH recommended removing the municipal classification and reclassifying municipal properties as small or large commercial users.
For the use of water, there is a product charge divided into two levels. These levels are based on the measured water usage.
Cavett explained that these two levels were established to encourage water conservation. The rate per unit of water increases as consumption increases. For residential customers, the first level is for customers using up to 5,000 gallons per month, the second level is above 5,000 gallons per month. The average water consumption for residential customers is 3,910 gallons per month. For small commercial customers of 9,000 gallons, a month is the dividing point between the two levels. For large companies it is 100,000 gallons per month and industrial it is 556,000 gallons per month.
Sanitary sewer tariffs have a base tariff and product charges, but with tiers. Residential, municipal and commercial properties have a base rate plus the measured monthly sewer flow. Industrial properties also have additional concentration charges for biological chemical oxygen demand (BOD), total suspended solids (TSS), and phosphorus.
Cavett said these additional industrial charges are needed to cover the cost of nutrient removal. Industrial properties are considering an increase in charges, but it’s simple to cover the cost.
SEH’s recommendation was to increase the base rate for water and sewerage in phases over four years.
“We wanted to minimize the annual impact through a phased approach” Cavett said.
The largest increase would be seen in base charges depending on the size of the meter. The commodity saw a smaller increase.
The current base rate for water is $ 10.10. The proposal would be to increase the base rate to $ 18 over four years, with an increase of $ 2 each year starting in 2022. The price of water would not be such a big change. The current consumption charge for residential water is $ 3.78 per 1,000 gallons for customers under 5,000 gallons per month and $ 4.73 per 1,000 gallons for customers over 5,000 gallons per month. SEH only recommends an increase of two cents for the two levels over the next four years.
This increase in revenue of two cents would be the same for small business customers. Large commercial properties would see an increase of six cents. Industrial customers would see an increase of 10 or 11 cents.
Sanitary sewer rates would see a base charge increase from $ 6.75 to $ 10 per month. This change would be implemented in 2022. Cavett said the change could not be phased in over four years without income falling below expenses.
The monthly commodity charge for non-industrial property is $ 4.22 and $ 1.72 per month for industrial customers. SEH recommended that this remain unchanged until 2025. Industrial loading charges would increase per pound of BOD, TSS, or phosphorus. By 2025, BOD would increase by one cent per pound; The TSS would increase by six cents per pound and $ 1.07 per pound of phosphorus.
Cavett said the cost of removing nutrients was the area of ââgreatest increase, but the increase was gradual until 2025.
Based on the data, the average residential water user would see an increase of $ 8 on their monthly bill. About 56% of residential users of single families in New Ulm use 5,000 gallons of water per month and pay $ 29. By 2025, the monthly fee would be $ 37. For that average user, sewer rates would drop from $ 27.85 to $ 31.10.
Compared to other local communities, New Ulm’s water and sewer rates are said to be average. Hutchinson would pay less on average than New Ulm for these services, but Mankato, Marshal and St. James would pay more.
Cavett said that in general, communities with higher water and utility rates undergo a capital improvement project.
Based on the industry increases, PUC commissioner Sean Fingland asked if utilities were in contact with industries in the city. He said that some industrial customers have started the budgeting process and that is important information.
Utilities Director Kris Manderfeld said these recommended tariffs have yet to be approved, but utilities will have a meeting with industrial customers to discuss tariffs for next year.
The intention is to present the first phase of the rate increases to the PUC committee at a future committee meeting. Manderfeld said the PUC would only consider the early stages of the increase. The plan is to review the impact on the budget each year before approving additional phases.