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33 percent rate hike proposed for metered sewer customers

by CJ Carnacchio

August 07, 2013

Metered sewer customers are facing a potential 33 percent increase in their rates if a recommendation from the Oxford Township Water and Sewer Committee is approved.

Last week, the committee voted 3-0 to recommend to the township board the metered rate be increased from $23 to $30.64 per thousand cubic feet (mcf) beginning Oct. 1.

The proposed increase is based on an analysis conducted by township engineer Jim Sharpe. His report showed the metered sewer rates charged by the township are not enough to cover what the municipality is being billed for by the Oakland County Water Resources Commissioner's Office.

"All we want to do is be on par," said township Trustee Jack Curtis, who chairs the Water and Sewer Committee. "We're not out to make money. We're just trying to collect enough to pay our bill and pay it fairly."

Only 54 of the township's 3,484 sewer customers are charged for their usage based on how much water they consume. This is measured via water meter readings. There is no separate sewer meter that measures the flow of waste.

A majority of the metered customers are businesses such as Boulder Pointe Golf Club, Meijer, the Oxford Mills strip mall, McDonald's, Big Boy and Harvest Time.

However, the group also includes the high school, public library, fire station on W. Drahner Rd. and Christ the King Church.

Between Jan. 1 and July 11 of this year, the metered sewer customers paid the township a combined $36,412 in usage fees. Under this proposed increase, they would contribute a total of $45,209 in a six-month period.

"You're only talking an increase of $9,000 total," Sharpe said. "You don't have a lot of metered customers."

Two factors are driving the proposed increase. First, the township sewer system needs to meet its expenses.

Metered customers are currently paying $23/mcf while the county is charging the township $20.62 to treat the sewage.

On the surface, it would appear the township is charging $2.38/mcf more than it's being billed for by the county.

But that's just the treatment cost.

Sharpe explained that when other county costs are factored in, such as $97,000 per quarter for operations and maintenance and $30,000 for capital improvements, the township is actually being billed at an "effective rate" of $30.64/mcf, which represents a $7.64/mcf loss for the township among metered customers.

"This isn't just somebody pulling something out of their pocket to make some money it's fact," Curtis said.

The second reason is equity among sewer users.

Right now, 5.2 percent of the sewage that flows out of the township comes from metered users.

However, based on the current $23/mcf rate, these customers are only paying 4.19 percent of the total county bill, according to Sharpe's analysis.

That difference is being made up by the system as a whole, which means non-metered sewer customers, who are primarily residential users, are paying it.

Non-metered sewer customers currently pay $86 per Residential Equivalent Unit (REU) every six months. Beginning Oct. 1, they will be charged $86 per REU every three months, a 100 percent increase.

An REU is a unit of measurement equal to the average water usage of a single family home, which is 320 gallons per day.

A home is assigned a value of 1 REU.

"By raising the metered rate up to the $30.64 (mcf), they would be paying for the same amount that they're using," Sharpe said. "They're using 5.2 percent of the system; they'll now be paying for 5.2 percent of the (county) invoice. That seems pretty fair to me."

"Those metered customers would be paying the bill (from county) and we would not be making a dime (under the proposed rate). It's just covering the cost," Curtis said.

"They're basically paying the same share (of the sewer cost) as a (non-metered) residential home," Sharpe noted.

"That's what we're looking for fairness," said Supervisor Bill Dunn, who serves on the committee.

Given the county regularly raises its rates, Sharpe told the committee it "may need to look at updating (its metered rates) every year."

If the township board approves this increase, it would be the third time in four years the metered rate has changed.

In June 2009, township officials voted to lower the metered sewer rate from $20 to $17.50/mcf because the sewer fund's reserves were thought to be excessive at $7.5 million.

The board also gave all sewer customers a break by charging them nothing for usage from April through June of that year.

In August 2011, township officials voted to increase the metered rate from $17.50 to $23/mcf.

This was done based on projections that the sewer fund's $5.4 million in reserves could be depleted due to rising costs from Detroit, Oxford's portion of a large-scale sewer rehabilitation project and projected shortfalls in the sewer operations budget.