The city annually reviews its utility rates to consider adjusting fees.
Last 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.
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The last water and sewer cost of service study was done in 2001.
City reviewing water and sewer rates, services
“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.
During their Sept. 3 meeting, the City Commission will consider setting a public hearing for Oct. 1 on proposed utility rate changes, which if approved, would be effective Nov. 1.
City to conduct survey of water and sewer rates, services
The AE2S study recommended making changes to user classes, which have in turn changed the way the proposed rates are being presented, according to the city staff report.
As proposed, for residential customers, an average water bill would increase 71 cents per month or 4 percent, from $17.64 to $18.35 per month.
An average residential sewer bill would increase 18 cents per month or 1 percent, from $23.72 to $23.90 per month.
An average storm drain bill would increase 32 cents per month or 5 percent, from $6.28 to $6.60 per month.
The average monthly residential utility bill would increase $1.21 or 3 percent.
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For commercial customers, an average water bill would increase $3.01 per month or 6 percent, from $54.46 to $57.47 per month.
An average commercial sewer bill would increase $2.10 per month or 3 percent, from $74.12 to $76.22 per month. An average storm drain bill would increase 45 cents per month or 5 percent, from $9 to $9.45 per month.
The average monthly commercial utility bill would increase $5.56 or 4 percent to adjust inequities in the commercial user group, according to the staff report.
The rate increase for water is due to about $102.8 million in capital improvements needed over the next decade, according to Public Works.
The significant projects include:
- Ongoing watermain replacement: $30.6 million
- Water treatment plant electrical upgrades (Phase 1 and 2): $22.6 million
- North/South river crossings: $11.5 million
- Water treatment plant filter media replacement and upgrade (Phase 1, 2 and 3): $9.6 million
- Water treatment plant sludge processing improvements: $5 million
Over the next decade, operating expense is projected to grow from $6.2 million to $9.8 million. The projected cost escalation for key operational expenses is due to chemicals, power, labor and general inflation, according to Public Works.
Fire hydrants are integral to the water system and are included as a monthly charge within the rate structure rather than an annual special assessment. Staff recommends 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 34 cents monthly for 1-inch meters and a 6 percent increase or 75 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, according to the city.
The significant projects include:
- Ongoing sewer rehabilitation: $11 million
- Waste water treatment plant westside pump station improvements: $1.75 million
- Lift Station No. 1 rehabilitation: $3 million
- Nutrient discharge improvements: $10 million
Over the next 10 years, operating expense is projected to grow from $5.9 million to $8.6 million, according to Public Works, 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, according to city staff.
