Mayor and Council Approve Increased Water and Sewer Rates

From the City of Rockville website:

Rockville customers will see increases to water and sewer charges over the next three years after the mayor and council recently approved rate changes to address deficits in the City’s water and sewer funds.

Under the new rates, the water ready-to-serve charge will increase by 10 percent in fiscal year 2016, which begins July 1, and will increase by 4.5 percent in fiscal years 2017 and 2018. The water usage charge will increase by 3 percent in FY16 and by 3.5 percent in FY17 and FY18. Taken together, the charge for water service would increase by 3.53 percent in FY16 and by 3.59 percent in FY17 and FY18.

The sewer ready-to-serve charge for FY16 will increase by 20 percent in FY16 and by 13.25 percent in FY17 and FY18. The usage charge, which is the same for all meter sizes, will increase by 12 percent in FY16 and by 12.25 percent in FY17 and FY18. Taken together, the charge for sewer service would increase by 12.66 percent in FY16 and by approximately 12.35 percent in FY17 and FY18.

Rockville water and sewer customers will see the new rates reflected on bills issued on July 15, during the first billing cycle of FY16.

For details on the new rates, including charges by meter size, see the agenda for the Jan. 5 Mayor and Council meeting at www.rockvillemd.gov/agendacenter.

The city contracted with a consultant to conduct a comprehensive study of Rockville’s water and sewer funds, rates and rate structure. In November, the Mayor and Council took significant steps towards their goal of sustainable rates to support the city’s water and sewer infrastructure by unanimously approving all 10 recommendations resulting from the study by Burton & Associates.

The city last performed a water and sewer rate study in Fiscal Year 2007. Since then, several factors have contributed to a $13.1 million deficit in the water fund and $8.3 million deficit in the sewer fund, including repairs to a break in the City’s main water trunk line and upgrades to the water and sewer systems to address aging infrastructure and comply with federal environmental regulations.

The Mayor and Council’s action addresses one of the most significant financial issues facing the City. Rockville shares a core challenge with utilities across the country, namely, a rate structure that relies on revenue from usage fees to cover the cost of water and sewer operations. While the vast majority of these operations costs are fixed, revenue from usage fees has decreased due to increased conservation of water as a precious resource.

The rate structure changes will slowly begin to change the amount of revenue each system derives from a fixed source as opposed to from usage fees. This is an important and critical first step that will begin to show results almost immediately, said Gavin Cohen, the City’s director of finance. “It’s important for residents to understand that utilities such as the water and sewer systems require ongoing investment in their infrastructure,” Cohen said.

The water fund is used to account for the financial activity associated with the treatment and distribution of potable water. The sewer fund accounts for the financial activity associated with the collection and delivery of sewage for treatment and disposal. Nearly all of the capital costs in the sewer fund, and a substantial portion of the operating costs, are payments for the operation of and capital improvements to the District of Columbia Water and Sewer Authority’s Blue Plains Advanced Wastewater Treatment Plant.