Columbus City Council approved the first reading of a rate increase for the water utility and will vote on it again on Aug. 4.
The rate petition, if approved by the council, could be filed with the Indiana Utility Regulatory Commission around mid-August. If the commission approves the rate increase, it could take effect around August 2021.
Columbus City Utilities executive director Scott Dompke said at a recent board meeting that the rate increase is a necessity for Columbus. “The water utility must be a sustainable, viable financial entity to be able to do the things that it does to support this community,” he said.
In most cases where the state commission approves an increase, the rate hike is less than what is originally requested. If the proposed increase is approved in its entirety, Dompke said Columbus would still be paying less than the average Indiana water bill of $28.89 per month for 4,000 gallons.
Right now, Columbus residents who use 4,000 gallons pay $9.82 per month. Under phase one, they would pay $14.06 per month. Under phase two, they would pay $16.44 per month. And in phase three, they would pay $17.49 per month.
At this time, it’s anticipated the first phase of the rate case will go into effect on Aug. 1, 2021. The next phase would begin Jan. 1, 2023 and the third phase would kick in on Jan. 1, 2024, Dompke said.
Columbus City Utilities currently has a five-tiered rate structure for the first 10,000 gallons, the next 40,000 gallons, the next 250,000 gallons, the next 700,000 gallons and over 1,000,000 gallons. Part of the rate case is a new rate structure that only has three tiers: the first 15,000 gallons, the next $285,000 gallons and over 300,000 gallons.
If approved, the rate increase would be the first for Columbus City Utilities since 1992. As a result, last year’s budget was almost the same as it was 24 years ago, Dompke said. However, since 1992, the city’s population has increased by about 50%. Since the early 2000s, water utility revenue has fallen 12%. Operating expenses have risen 76% since 1995.
The rate increase is intended to help fund operations, maintenance, and upgrading of aging infrastructure and capital project needs. Without a water rate increase, the city will likely face more problems with its water infrastructure, Dompke told city utilities board members at their June meeting.
“We’ll end up spending more money on emergency repairs and less on preventative maintenance,” he said. He also noted that maintenance is a means of reducing “the long-term costs of operation” and that the more projects are delayed, the more they end up costing.
“This has been in the works for many years,” Dompke said. “And while the timing is less than ideal, it is something we cannot avoid any longer.”
He said that after this rate petition, assuming it is approved by the IURC, there may be other rate increases in the future.
“It would be our goal to come back for rate adjustments on a three to five year cycle,” Dompke said. He said he could not currently give an estimate for what these adjustments might entail.
At Tuesday’s meeting, city council also passed the first reading of a bond ordinance for the rate increase.
Dompke said in his presentation that the capital requirements for 2021-24 total $30 million, with $22.2 million funded by bonds, $4.3 million funded by the rates (about $1.7 million a year) and $3.5 million funded by cash on hand.
He also said that if there is a two-year delay in bonding $22 million of projects, it would increase the cost by about $1.5 million.
The bond ordinance states that the city’s bonds and bond anticipation notes will not exceed $24.42 million.
Doug Baldessari, a partner from the Baker Tilly firm, said that while the anticipated amount of funding from bonds is $22.2 million, the $24.42 million threshold is there as a “cushion” to allow for increased costs and other unexpected expenses. The proposed rates are based on a cost of service study prepared by the advisory, tax and assurance firm.
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Water infrastructure projects brought up in the city’s rate case presentation included:
- Two wells under construction in the south well field, as well as plans to construct additional wells.
- A wastewater centrifuge now under construction at the treatment plant.
- Water main replacement on Ninth Street, between Franklin and Lafayette.
- Water main replacement on Eighth Street, from Lafayette Avenue to Cottage Avenue.
- Eliminating contamination from three different wells.
- Increase water for fighting fires in older parts of the city.
- Taking pro-active steps to lower the number of equipment breakdowns.
- Adding raw storage tanks.
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