Utilities consider sewer rate increase

Columbus City Hall exterior is shown in this Republic file photo. Mike Wolanin | The Republic

In addition to new water rates, Columbus City Utilities customers could also see a hike in sewer rates this fall due to operating expenses, infrastructure needs and debt service.

The Utilities Service Board discussed a proposal for sewer rate increases Thursday and will have a special meeting at 11:30 a.m. Monday to a sewer rate resolution.

The proposed rates and charges would be phased in over a three-and-a-half year period, according to a presentation from Baker Tilly Municipal Advisors, LLC. The firm has been retained by city utilities for services related to its current water and sewer rate cases.

The utilities board recently approved water rate increases that were authorized by the state. These rates will go to city council next. The first phase of increases is expected to take effect in July and start affecting customers’ bills in August, said Interim Utilities Director Keith Reeves.

According to Doug Baldessari with Baker Tilly, if everything goes according to schedule, the new sewer rates would be effective on Aug. 1.

A 4,000 gallon monthly sewer bill is currently $31.10 in Columbus, he said. That cost would increase to the following amounts under the proposed rates:

  • Phase I: $34.94 (begins on adoption of the rate ordinance)
  • Phase II: $38.09 (begins Jan. 1, 2023)
  • Phase III: $40.37 (begins Jan. 1, 2024)

The city officials have said in the past that the sewer utility, unlike the water rates, is not regulated by the Indiana Utility Regulatory Commission. As a result, a sewer rate increase would not need to go through the commission’s lengthy approval process.

Instead, it would need to be approved by the utilities board and Columbus City Council, with the latter likely to require two readings before final approval. The process will also include a time for public hearing, Baldessari said.

In discussing the proposed increases, he cited a rate comparison sponsored by Accelerate Indiana Municipalities, which showed that the 2019 statewide average rate for a 4,000 gallon bill was $42.17.

The rates under Phase III would still be under this amount, he said, and would put Columbus “in the middle of the pack” in comparison to other Indiana communities. He explained that this is good, since other communities are likely eyeing increases as well.

He said that the rates would also put the community in a similar middle position for commercial and industrial users, which would both see a larger increase than residential users.

The proposed rate increase also includes a change in rate structures, Baldessari said. The utility’s current rate structure includes a fixed monthly charge for all users. Then there is a declining rate block structure, meaning that the more gallons a customer uses, the lower the cost per 1,000 gallons is.

He said that the recommended rate structure would be a monthly base charge based on water meter size (the larger the meter, the higher the charge) and then a monthly flow rate based on customer classes. The latter still gives a lower cost per 1,000 gallons to larger customers.

Both the base charges and flow rates would increase over each of the three phases. The rate proposal also includes phased increases for excessive strength surcharges and unmetered residential users.

Utilities officials also discussed considerations for industrial customers with major differences in water and sewer usage at Thursday’s meeting. Reeves said that the board has asked utilities staff to develop a base rate plan to address these customers, and they expect to have it ready by Monday’s meeting.

Per Baldessari’s presentation, objectives in the sewer rate case include maintaining financial strength, providing funding for necessary capital improvement projects, paying back the water utility for a loan and providing funds for necessary operating expenses and capital costs.

He said that the main cost drivers in the utility’s need for increased revenue are debt service (35%), replacements and improvements (33%) and operating expenses (32%).

Baldessari’s presentation showed that there is a large number of anticipated rate-funded capital projects that cover needs such as infrastructure improvements, replacements, upgrades and equipment. Staffing changes have also been built into the rate case.

The presentation also showed that the utility’s expected bond-funded projects include the Westside interceptor project, Woodside Industrial Park improvements, and lift station rehabilitations.

Baldessari said that the utility’s capital requirements include an anticipated $34.4 million in projects funded by long-term bonds and $7 million in projects funded by rates and charges for 2021 to 2023. He added that the city will look for available grants.

Utilities officials also discussed the possibility of another rate increase in the future. Reeves said that it’s likely they’ll discuss rates again in a few years, but added that it’s not certain they would seek another set of increases at that time.

[sc:pullout-title pullout-title=”Rate increases under the current proposal” ][sc:pullout-text-begin]

Residential monthly sewer bill for 4,000 gallons

Current Columbus bill: $31.10

Phase III: $40.37

Commercial monthly sewer bill for 500,000 gallons

Current Columbus bill: $2,228

Phase III: $3,410

Industrial monthly sewer bill for 2,000,000 gallons

Current Columbus bill: $6,853

Phase III: $10,948

Industrial monthly sewer bill for 15,000,000 gallons

Current Columbus bill: $43,383

Phase III: $79,328

[sc:pullout-text-end][sc:pullout-title pullout-title=”Where to learn more” ][sc:pullout-text-begin]

To watch video footage from Thursday’s meeting, go to columbus.in.gov/video/live-streaming/, search “Utilities Service Board” in the archives and click on the option for May 20, 2021.

[sc:pullout-text-end][sc:pullout-title pullout-title=”What’s next” ][sc:pullout-text-begin]

The utilities board plans to consider a sewer rate resolution at a special meeting on Monday, May 24 at 11:30 a.m. at Columbus City Hall in the Cal Brand Meeting Room. Per the meeting agenda, in-person attendance will be limited and subject to certain restrictions.

Individuals are encouraged to view the meeting’s livestream or attend virtually. The livestream will be available at columbus.in.gov/video/live-streaming/. Those who wish to participate virtually should contact Melinda Burton at [email protected] to receive a meeting link.

[sc:pullout-text-end]