New Great Falls utility rates proposed, public hearing will likely be Sept. 18
Staff annually reviews the water, sewer and storm drain funds to balance rates with system needs.
On Tuesday, the City Commission will consider setting a public hearing on the proposed rates for Sept. 18. If approved, the new rates take effect Oct. 1.
The proposed changes were included in the city budget for this fiscal year, which was approved in July.
This year, the city contracted with Advanced Engineering and Environmental Services, Inc., or AE2S, for a water and sewer utility rate study base on a comprehensive review of the city’s water and sewer budgets, the water master plan, wastewater facilities plan, customer classes, current usage data and future planned growth of the city.
The last water and sewer cost of service study was done in 2001.
“The study was conducted to ensure revenue adequacy, cost of service and rate planning analyses and evaluated current and future costs and compared them to the industry standards for Montana and our region,” according to the staff report.
As a result of the study and staff recommendations, the average monthly utility bill would decrease by two percent, or 91 cents.
For residential customers, staff is proposing that the residential rate decrease by 9 percent from $19.35 monthly to $17.64.
The average residential sewer bill would increase one percent, from $23.49 monthly to $23.72 and the average storm drain bill would increase 10 percent from $5.69 monthly to $6.26.
To correct inequalities in water rates, staff is recommending the change in fixed charges to align the fees with the American Water Works Association and to adjust essential water use from 300 cubic feet to 600 cubic feet per month.
Staff recommendations also include eliminating the tiered rate for residential sewer consumption to be more consistent with common wastewater industry practices and level out the rate.
For commercial customers, the average water bill would increase about $2.72 per month, or five percent, from $51.74 to $54.46. An average sewer bill would increase three percent, from $72.03 to $74.12 monthly. An average storm drain bill would increase 10 percent, from $6.69 to $7.36 monthly.
The rate increase for water is due to roughly $102.8 million in capital improvements needed over the next decade, according to city staff.
Significant projects include:
- ongoing water main replacement at $30.6 million
- Water Treatment Plant electrical upgrades (Phase 1-2) at $22.6 million
- North/South river crossings at $11.5 million
- Water Treatment Plant filter media replacement and upgrade (Phase 1-3) at $9.6 million and
- Water Treatment Plant sludge processing improvements at $5 million.
Over the next 10 years, operating expenses are projected to grow from $6.2 million to $9.8 million. Those increases are largely attributed to increased costs for chemicals, power, labor and general inflation, according to the city.
Staff is also recommending a gradual per meter size correction strategy with differing increases applied by meter sizes to gradually correct ratios to ensure that the total revenue is in line with the cost of service. Staff is recommending a 10 percent increase or 31 cents per month for 1-inch meters and a 6 percent increase or 71 cents per month for 2-inch meters.
The rate increase for sewer is due to about $45.4 million in capital improvements needed over the next decade.
Significant projects include:
- ongoing sewer rehabilitation at $11M
- Waste Water Treatment Plant westside pump station improvements at $1.75 million
- Lift Station No. 1 rehabilitation at $3 million
- and nutrient discharge improvements at $10 million.
Over the next 10 years, operating expense is projected to grow from $5.9M to $8.6M. The projected cost escalation for key operational expenses is due to chemicals, power, labor and general inflation. The rate increase for storm drain is due to the approximately $23.2 million in capital improvements needed over the next 10 years.
During a July work session with the commission, Shawn Gaddie, division manager at AE2S Nexus, said “you’ve done quite well in managing the rates,” and providing services.
Gaddie said the city had a complex user base for the utility system, through residential, commercial, industry and Malmstrom Air Force Base, among others.
Gaddie told commissioners that utility rates are increasing industry wide, over the consumer price index, in large part due to federal regulations, aging infrastructure and less federal funding.
According to a 2018 survey of 249 communities throughout the Upper Midwest and Rocky Mountain region, Great Falls ranked among the lower costs for utilities. For sewer, Great Falls was the fourth lowest in sewer rates, after Belgrade, Butte and Havre. Great Falls ranked third lowest for water rates in the state, after Belgrade and Kalispell.
For water and sewer rates, Great Falls has the second lowest rate of the seven major cities. The city comes in a bit higher than Missoula, which didn’t report data for the AE2S study, but staff their estimated based on available data. But, things in Missoula are likely to change since the city recently took over the water system there and is involved in a substantial lawsuit regarding the system.