June 16, 2010
Actions taken by the Plymouth Board of Public Works and Safety and the City Council Monday night will result in a sewer rate hike for city residents in the near future.
Eric Walsh of Umbaugh and Associates, the city’ financial consultants came before the Board and suggested a rate hike for the utility. The recommendation comes after a review of the year-end financial reports for the utility. Walsh said that current cash flow for the waste water utility are negative and proper action by the board was to pursue an ordinance to raise rates thus increasing revenue to keep the utility healthy.
It was explained there were several reasons for the reduced revenue, much of which has been caused by a significant decrease in the amount of industrial use of the utility.
A two phase increase was recommended with phase one being an increase of approximately $1.70 a month for the average customer (5,000 gallons). Phase two would be implemented in January next year and would add another $2 to the average customer’s bill, making a total increase of $3.70. Walsh said the reason to hold off on Phase II of the increase would be to allow for time for industrial consumption to increase and perhaps lower, or make unnecessary the second rate hike.
Besides the reduction in industrial consumption, Umbaugh found a deficit in operations and maintenance of nearly $150,000 from the previous year. The other factor is a significant loss of interest income due to falling interest rates.
The age of the treatment facility has contributed to the operations and maintenance deficit according to Utility Superintendent Donnie Davidson. The last major upgrade of the facility was in 1987. The equipment has a life expectancy of 20 years. Many improvements have been made to the facility but several high ticket items still remain on the horizon. Davidson said additional improvements are in the near future to keep the city in compliance with (IDEM) Indiana Department of Environmental Management standards and to keep their operating license.
Davidson noted the plant’s biofilter medium is scheduled for replacement in 2013 and will have a price tag of nearly $1.5 million.
“That’s the basis of the whole operation,” said Davidson. “We are doing our best to extend equipment but much is getting to the end of its lifespan. Some of it is too expensive to take out of operations and maintenance and will have to be capitalized.”
The Plymouth Common Council will continue with the rate hike ordinance at its next meeting.