– Editor’s note:
The Yelm City Council is expected to vote on a multi-year water rate increase Tuesday, to be added to their previous storm-water and sewer rate increases. With no current grant opportunities forthcoming, the city’s staff and the council have previously discussed a water rate increase over several years to be the best option for the 2018 Water System Plan (WSP) update. According to the Staff report, the plan “includes a financial analysis and rate increase recommendation which supports existing and future debt, operation and maintenance of the water system, and new capital projects identified in the updated Capital Improvement Plan (CIP).” Only one Public Hearing on the water rate increase was conducted and that was with only one day advance notice, with that hearing just prior to the Thanksgiving holiday weekend.
– From the Staff Report:
Ordinance 1036 – Revisions to YMC 13.04.250 – Monthly Water Rates
The City currently charges a flat base rate to water customers plus a varying consumption rate based on quantities of water used by customers on a monthly basis. A series of single-year scenarios was developed to determine an improved rate structure including:
1. Adoption of the proposed 5% increase in the base rate and consumption rate with no change in the five tier rate structure
2. No change in base rate (0% increase), and 5% increase in consumption with no change in the five tier rate structure
3. No change in base rate (0% increase), and 5% increase in consumption with revised four tier rate structure
4. Increase base rate by proposed 5%, and 5% increase in consumption with revised four tier rate structure (ordinance 1036 proposed)
The results of these four alternatives are attached. In summary, scenarios 2 and 3 resulted in highly variable increases/decreases ranging from some high consumers seeing up to a 17% reduction in consumption rates, and other customers seeing a 16% increase in consumption rates. Scenario 1 is a flat, basic, increase to all customers, and scenario 4 demonstrated an optimized structure for the maximum number of water consumers while still achieving the necessary overall rate increases to meet the water utility operational and capital funding needs.
City staff recommends proceeding with adoption of scenario 4 and increase the base rate by 5%, and increase the consumption rate by 5% for years 2018 and 2019, and a 4.5% increase in 2020 with a new four tier rate structure beginning in 2018. The new four tier structure provides for a smoother distribution to low and mid tier residential customers which make up the vast majority of our customer base (over 85%) and increases the consumption rates to higher consumers which makes up less than 2% of the residential customer base.
Upon the conclusion of the third rate increase in 2020 it is also recommended to increase rates at a minimum based on the consumer price index for our region. This will allow for rates to keep up with inflation.
City staff also recommends a rate review be conducted every two to three years to determine if the rate increases are capable of supporting the proposed CIP for the water utility, and to determine if lower or higher rate increases are needed in the future. A regular and comprehensive look at rates is a best management practice that has been inconsistent in the past and a needed improvement for stronger fiscal responsibility and transparency from the water utility to our customers.