Salem water rates could increase
Utilities Commission to revisit rates in response to water asset management plan
SALEM–The city Utilities Commission will be talking about increasing water rates sometime next year and plans to have a study done of the sewer rates, too.
“We’re going to have to revisit our entire rate structure,” Commission Chair Bob Hodgson said, based on the findings in a state-mandated water asset management plan presented Thursday.
According to the plan, the city needs to increase the minimum bill for water by $3 each year through 2024. The minimum bill on the water side is currently $10.30 for 200 cubic feet of water.
“Currently the minimum is too low to recoup fixed costs. Additionally the usage rate should be increased by 5 percent in each of those years,” the report said.
The rate is currently $1.90 for every 100 cubic feet of water over the minimum and will automatically go to $2 for every 100 cubic feet in 2020 over the minimum as part of the last rate increase approved in 2017.
The report said the rate increases suggested by the Rural Community Assistance Program (RCAP) would equal about $3.30 per month or $39.60 per year for the average water user. The average water bill now is about $17.90 per month and the average usage about 4,500 gallons. This does not include the sewer portion of the utility bill.
The board took no action on the recommendation at this time, but Hodgson said they’ll be having discussions in 2020. With increasing costs, mandates by the Ohio Environmental Protection Agency and aging infrastructure and equipment, he said they’ll have to do something.
The plan prepared by RCAP looked at all phases of water operations, including management practices such as annual main line flushing, annual hydrant inspections, valve exercising and leak detection, technical specs dealing with the asset numbers, such as the number of hydrants, valves, miles of lines, storage tanks, water loss and water flow, plans for asset rehabilitation and replacement for preventative maintenance and a capital project plan for replacing infrastructure and improving the water plant.
The plan identified $219,000 in annual preventative maintenance costs on the water side between the distribution, treatment and administrative divisions, an additional $460,165 annually for predictive maintenance in order to extend the life of major assets and replace short-lived assets for water operations, and $8.89 million worth of capital projects over 10 years dealing strictly with the water.
The plan had to do with water assets, not wastewater (sewer) operations, but Hodgson acknowledged that the commission will have to look at both. The commission decides on the water rates, while city council decides sewer rates. Hodgson said RCAP has been asked to come up with a price to do a sewer rate study. Since the decision on sewer rates rests with city council, he said the commission will review the study findings and then make a recommendation to council, which may not happen for another year.
The water side will come sometime next year since the commission already has RCAP’s recommendation and just needs some time to further review the report. During a work session preceding the regular meeting Thursday, RCAP Senior Rural Development Specialist Joseph Lawrie gave commission members an overview of the asset management plan and the recommended water rate increase to sufficiently meet the needs of the department to provide safe drinking water.
He explained that rates are considered affordable for many agencies if at 1.5 percent of the median household income or combined water and sewer rates at 3 percent. Rates below those numbers don’t qualify for grants or low interest subsidies to help finance capital projects, the report said. In Salem, he said the cost of water is half of 1 percent of the median household income. It’s very, very affordable.
The new suggested rate would still be affordable, he said, noting that the city needs more revenue to be sustainable and be able to serve the customer base and ensure the system remains operational. He said something that tends to lead to some confusion is the minimum bill. He said in theory it covers no water, but covers the fixed costs associated with providing the service, almost like paying to access the utility. He also said that water has been undervalued for a long time.
In other business, the commission heard a report by engineer Jon Vollnogle about some challenges on the Snyder Road sewer line project in the area of Newgarden, the railroad tracks and on Mullins Street where a water line break was discovered underground and cavern opened up. A 6-inch water line had to be repaired and the cavern filled in. Some issues also came up near the railroad tracks some related to the fiberoptic line that runs along there, but he said they’re all working together to meet the challenges. No discussion had taken place with the contractor yet about updating the work schedule due to the unforeseen issues.
The commission met for about half an hour in executive session with their attorney by phone related to ongoing litigation. No action was taken.
The next meeting will be 4 p.m. Dec. 19.