Columbus City Council members approved the second reading of an ordinance to establish sewer rate increases that will go into effect next year.
The council also approved an amended accompanying bond ordinance on second reading to issue revenue bonds in an amount not to exceed $61 million, as well as bond anticipation notes in an amount not to exceed $11 million for sewer utility projects.
Ordinances must be passed on two readings to be approved.
The vote on the new rates, amendment to the bond ordinance and the bond ordinance itself were approved 8-1 with Council member Chris Bartels, R-District 1, voting against all three.
Sewer rates will be increased over three phases, beginning with a 5.4% increase in 2025, 9% increase in 2026 and 5% increase in 2027.
The council during a meeting on Oct. 2 approved water rate increases of 18% in 2026 and 15% in 2027, but tabled the sewer rates until this month because a couple of members, including Bartels, had said they wanted to potentially rework the parameters of the accompanying sewer bond ordinance, even if that would mean an even higher rate increase for Columbus City Utilities (CCU) customers.
The reason for the increases are planned capital projects over the next few years to critical CCU infrastructure that had been deferred in years past, according to CCU officials.
The new rates were backed by the CCU board during its meeting on Aug. 19 and recommended by an outside firm, Baker Tilly.
Baker Tilly’s recommendations were based on a cost-of-service study done for both utilities and rate adjustments will vary based on customer class, with industrial and commercial customers now absorbing more of the cost burden.
CCU officials said in the past the burden had actually been more so on residential customers. That was shifted due to the analysis done by Baker Tilly.
The Indianapolis-based accounting and consulting firm presented potential alternatives to council members and discussed them during a special utility board in late October. CCU officials also met with council members individually.
CCU board members unanimously agreed that what they originally proposed was best for both supporting the utility’s capital projects to ensure the city has the infrastructure it needs to foster further growth, while also reducing the impact on the consumer.
The rates council approved on Wednesday night were what was originally proposed, however, they did amend the sewer bond ordinance to cap the max interest rate the sewer bonds would be issued at from 6% to 5%.
Bartels, who has driven much of the discussion on the sewer bond ordinance, has been concerned about its structure and the amount of interest being paid.
“I completely disagree that fiscally responsible is what this is,” Bartels said. “Having (an additional) 4% increase to the end user could get us out of this five-year interest-only bond debt cycle that we’re currently in. We’re never going to get out of it, unless we make a decision at some point to get out of it.”
Earlier in the meeting Councilor Elaine Hilber, D-District 2, who initially had signaled she was interested in taking a further look at the bond structure, said she agreed that what was originally proposed is best.
“If I’m paying my electric bill, I don’t care how long it takes Duke (Energy) to pay off their construction loan, and I don’t care how much Duke is paying in interest on their construction projects— I more so care that my rate is low, or keeping it as low as possible.”
Council member Kent Anderson, R-District 5, said the effort Bartels made in examining the bond was something he thought was worthy and said he loved the idea of a self-funded, non-debt driven utility, but observed that’s a larger discussion to be had later given CCU’s immediate needs.
“Utilities run on bonds and interest — that’s what they do,” Anderson said. “I think if we want to change that philosophically, that’s a really open discussion. But I think we’re not going to slay that horse in this meeting.”
Council member Grace Kestler, D-at-large agreed that its a complex issue, but said her focus is on balancing the impact on customers.
“I know that little bit, whether it’s a $1 (increase), can have a big impact on the rate payer,” Kestler said. “We’re supposed to make these tough decisions that are big financial decisions, but a lot of our community is trying to make day-to-day decisions to pay their bills.”
Water rates
Water rates are to be increased over two phases, beginning with 18% increase in 2026, followed by another 15% increase in 2027 for a typical residential user, assuming usage of 4,000 gallons per month.
According to a cost driver breakdown presented to council members, debt service and capital improvement plan projects are responsible for 81% of the increase in water revenue requirements and about 19% is due to operating expenses.
Below is an example of an average residential user monthly bill, assuming usage of 4,000 gallons per month:
- Current ($16.45)
- Phase 1 ($19.39)
- Phase 2 ($22.29)
Water rates are subject to Indiana Utility Regulatory Commission (IURC) jurisdiction, whereas sewer rates are not. Although the council approved water rate increases, the IURC will ultimately approve a certain rate schedule, which takes about a year.
The IURC will decide whether to accept the proposed water rates as presented, or may adjust them. If they are adjusted, the new water rates would come before city council one final time sometime next year for approval.
Sewer rates
Members considered the proposed new sewer rates first, which were to be increased over three phases beginning with a 5% increase during phase 1 in 2025, a 9% increase during phase 2 in 2026 and another 5% increase in 2027.
A cost driver breakdown indicated that the sewer rate increase is 48% due to debt service, 39% because of operating expenses and 13% for replacements and improvements.
Below is an example of an average residential user monthly bill, assuming usage of 4,000 gallons per month:
- Current ($40.37)
- Phase 1 ($42.57)
- Phase 2 ($46.40)
- Phase 3 (48.73)
Baker Tilly have consistently noted that CCU customers’ bills still remain rather low compared to cities such as Greensburg, Fort Wayne, Greenwood and Evansville, even after the increases.
