14 Sep 2014
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Water Rates to Increase 29.8 Percent on Average

Officials said the increase is to pay for debt service for treatment plant repairs.

Water Rates to Increase 29.8 Percent on Average
Portsmouth Water and Fire District customers will see a 29.8 percent increase in water rates this year after the district approved the increase at its April 28 meeting.

The rate kicked in May 1 and Phillip T. Driscoll, board chairman, said the rates are due to a 19.41 percent increase in the wholesale cost of water bought from the city of Newport.

Newport raised rates to pay for the district's share of an $84 million debt service required to replace the Lawton Valley Water Treatment Plant in Portsmouth and to "significantly upgrade" the Station One Treatment Plant in Newport.

Construction at the plants began in 2012 and is expected to be finished this year.

The rate increase of 29.8 percent doesn't mean all residents will see that increase. Most will see their water cost increase from 20 to 40 percent depending on their meter size and quarterly water use. A customer who uses 5,000 per quarter will see an increase of 20 percent from $131 to $157 per year, as an example.

A 10,000 gallon using customer would see a 35 percent increase from $242 to $326 per year.

William J. McGlinn, general manager and chief engineer, said the work is required to enable Newport Water, Portsmouth Water and the Navy "to meet current and future federal Safe Drinking Water Act water quality standards."

Since 2000, the three island water suppliers have seen "numerous violations" of the act, mainly for trihalomethanes, or TTHMs, which are restricted more this year.

Here's the complete text of the announcement:

Portsmouth Water and Fire District customers can expect a significant jump in water rates this year. According to Administrative Board Chairman, Philip T. Driscoll, the Board voted on April 28th to increase its water rates by an average increase of 29.8% for fiscal year 2015, which began on May 1st.

Mr. Driscoll said that in large part, the rate increases are attributable to a 19.41% increase in the wholesale cost of water purchased from the City of Newport. The increase from Newport is necessary to pay for the District’s share of the $84 million in debt service required for Newport to replace the Lawton Valley Water Treatment Plant in Portsmouth and to significantly upgrade the Station One Water Treatment Plant in Newport. Construction of the plants began in 2012 and is scheduled to be completed by the end of 2014.

Mr. Driscoll also indicated that the Administrative Board has restructured its billing practices. All water customers will be switched to quarterly billing beginning in May of 2014, while a handful of larger water users will be switched to monthly billing. The District will bill one-third of the quarterly customers each month in order to smooth out the staff workload for billing and payment processing. As part of this transition to quarterly billing, in their first quarterly bill only, some customers will be billed for two months of consumption and others will be billed for four months of consumption.

In addition, Mr. Driscoll also indicated that the Board has revised its water rate structure. The Board voted to eliminate the minimum charge that was billed in advance of service, which included twenty thousand gallons of water. Customers will now pay a quarterly base charge and a commodity charge, both billed in arrears, for the water metered during the quarter. In addition, the Board reduced the number of increasing water rate blocks from four tiers to two tiers. The first-tier rate for consumption between one and five thousand gallons per quarter will be $5.74 per thousand gallons. The second-tier rate will be $8.47 per thousand gallons for all consumption over five thousand gallons per quarter. The base charge will vary by meter size and will include the cost for the District to maintain and replace the water meter, radio reader and the curb stop assembly from the water main to the property line. The base charge also will include the cost to process meter readings and bill the customer. For a typical 5/8” residential water meter, the quarterly base charge will be $10.57. William J. McGlinn, the District’s General Manager and Chief Engineer indicated that the base charges and commodity charges are based on a cost of service analysis conducted by the District and its professional water rate consultant. Although the District is not regulated by the RI Public Utilities Commission (PUC), Mr. McGlinn noted that the cost of service analysis is consistent with the procedures used by the PUC to establish water rates for regulated utilities.

Although the average water rate increase is 29.8%, the actual increase that customers experience in their total annual water cost will range from 20% to 40% depending on their meter size and quarterly water consumption. Residential customers that use five thousand gallons of water per quarter will experience an increase of approximately 20% and a total annual cost of $157 compared to $131 last year. Residential customers that use ten thousand gallons of water per quarter will experience an increase of approximately 35% and a total annual cost of $326 compared to $242 last year. Residential customers that use fifteen thousand gallons of water per quarter will experience an increase of approximately 40% and a total annual cost of $496 compared to $354 last year. Residential customers that use twenty thousand gallons of water per quarter will experience an increase of approximately 37% and a total annual cost of $665 compared to $486 last year. Residential customers that use twenty-five thousand gallons of water per quarter will experience an increase of approximately 35% and a total annual cost of $834 compared to $619 last year. Residential customers that use fifty thousand gallons of water per quarter will experience an increase of approximately 24% and a total annual cost of $1,682 compared to $1,357 last year.

The last annual water bills have been mailed for two-thirds of the District’s customers, with the final bills scheduled to be mailed during the week of May 19th. Because of the change in billing practices, these annual bills do not include the historical minimum charge for twenty thousand gallons of water in advance. Since the customers paid for the first twenty thousand gallons for FY-14 in their FY-13 water bill, the FY-14 annual bill only includes an overage charge for water used over twenty thousand gallons.

Mr. McGlinn indicated that the treatment plant work is required to enable Newport Water, Portsmouth Water and the Navy to meet current and future federal Safe Drinking Water Act water quality standards. Since 2000, the three island water suppliers have seen numerous violations of the act’s Disinfectants/Disinfection By-products Rule, specifically for trihalomethanes, or TTHMs. The rules for the maximum level for TTHMs became more restrictive this year, making compliance by the island’s water suppliers very unlikely with the current state of the Newport treatment plants. TTHMs, which the EPA classifies as a potential carcinogen, are a by-product formed when chlorine used in water treatment reacts with organic matter in the raw and treated water. In addition, Mr. McGlinn noted that the new treatment processes at the plants will be better able to treat the water for seasonal taste and odor problems, which have been a source of complaints over the years.

In addition to the increased cost of water purchased from Newport, Mr. Driscoll said that the current and projected annual rate increases are necessary to help fund the District’s operating costs, technology improvements, capital improvements and debt service.

The Board approved an operating budget of $3,749,089, which results in an increase over last year’s operating budget of 13.47%. The Board approved a total budget of $4,063,224, which includes capital expenses, for an increase over last year’s total budget of 13.58%.

The District’s property tax revenue will remain unchanged, with the exception of the revenue from the addition of new properties to the tax roll. The District’s current tax rate of $0.18 per thousand dollars of assessed value will be adjusted up or down based on the final assessed values determined by the Town of Portsmouth following its current revaluation process. The current annual district property tax is $72.00 for a property assessed at a value of $400,000. Property tax revenue represents only 12.8% of the District’s total revenue. Mr. Driscoll indicated that the Board is working hard to properly maintain and improve the water system, while providing fair and reasonable rates for customers and taxpayers. Mr. Driscoll also indicated that the Board will continue to ensure that the cost it pays for wholesale water is fair and reasonable by working with Newport Water and intervening in water rate cases before the Public Utilities Commission, as necessary.

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