City considers wastewater rate hikes
By David Little
WILLMAR — City residents, commercial and retail businesses, and industry will pay more for wastewater treatment if the Willmar City Council enacts a proposed five-year schedule of rate increases.
The proposed increases would also affect users of the Eagle Lake Sewer District, which sends waste to Willmar for treatment under a 45-year agreement.
The rate increases are being recommended by financial adviser Springsted Inc. of St. Paul. The city engaged Springsted last year to review the financial performance of the wastewater utility, and to make recommendations on rate changes necessary to meet the utility’s required cash flow needs.
City officials say these needs consist primarily of operational expenses, capital replacement and maintenance, debt service payments on loans taken out to finance the project, and cash reserve requirements.
The city’s $83 million wastewater treatment plant and conveyance system went into operation in the fall of 2010. Springsted said operations at the new wastewater treatment plant are about as efficient as possible.
Springsted’s recommendations were reported to the council last November and were discussed this week by the council’s Finance Committee.
The committee gave City Administrator Charlene Stevens approval to have City Attorney Robert Scott prepare an ordinance to enact the proposed rates.
A date for a hearing to take comments from the public on the rates is tentatively set for March 4. If the ordinance is approved, the rates would become effective April 1.
Stevens says the study concluded the city needs to raise rates to have positive cash flow and net income to pay for debt service and to pay for anticipated projects such as the proposed Lakeland interceptor sewer line project, the western interceptor sewer project and lift station replacement.
Springsted says the increases will allow the utility to restore positive net income by 2014, and to accumulate recommended minimum cash reserves by 2017. Springsted does not foresee any rate increases from 2018 to 2022.
Springsted said the average residential rate, based on 5,984 gallons per month, would increase 7 percent from $41.90 in 2012 to $45.18 in 2013.
In the following years, annual residential increases projected through 2017 would be:
- 8 percent, from $45.18 in 2013 to $49.10 in 2014.
- 5 percent, from $49.10 in 2014 to $51.66 in 2015.
- 5 percent, from $51.66 in 2015 to $54.46 in 2016.
- 3 percent, from $54.46 in 2016 to $56.63 in 2017.
Monthly residential rates after 2017 would level off, from $56.72 in 2018 to $56.90 through 2020, according to study projections.
Springsted also calculated sample bills for other user categories:
- A gas station, based on 26,928 gallons per month, would see an increase from $129.66 per month in 2012 to $194.51 per month in 2017.
- A restaurant using 56,100 gallons per month would have an increase from $214.29 per month in 2012 to $348.95 per month through 2017.
- A retail business using 374,000 gallons per month would see an increase from $1,235.54 per month in 2012 to $2,130.95 per month through 2017.
- An industrial business using 28.78 million gallons per month would see an increase from $130,629 per month in 2012 to $234,540 per month through 2017.
- Eagle Lake Sewer District. Water consumption is not metered as it is for Willmar users; therefore the rate is based on an estimated consumption of 7,480 gallons per month and a water meter charge of $27 per month, which is 1½ times that of the city meter charge of $18 per month. As a result, a sample Eagle Lake bill would increase from $49.70 per month in 2012 to $70.55 per month in 2017.