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Hearing on proposed water/sewer rate hikes June 17

by CJ Carnacchio

June 04, 2014

The latest proposal to increase Oxford Village's water and sewer rates on Oct. 1 will be the subject of a 6 p.m. Tuesday, June 17 public hearing in the council chambers located at 22 W. Burdick St.

Under this proposal, which replaces a previous proposal created by Mike Engels, of the nonprofit Michigan Rural Water Association, village customers would:

n No longer receive any free gallons of water and sewer;

n Experience a 16 percent increase in the monthly water and sewer base rates as well as the water flow rate;

n Experience a 439 percent increase in the sewer flow rate.

Also, it's proposed that all non-residential water/sewer customers start paying the Industrial Waste Control (IWC) charge levied by the Detroit Water and Sewerage Department (DWSD) and currently absorbed by the village.

Under the proposed rates, an average village household that uses 4,000 gallons of water per month would go from paying $47.77 to $74.34 on its monthly water/sewer bill. That's an increase of $26.57 (or 55.6 percent).

The effect of these proposed rates on actual Oxford businesses and homes over a 12-month period is being determined and evaluated using 2013 usage figures, according to village Manager Joe Young.

Councilwoman Maureen Helmuth made the motion proposing these rate changes because, after running some calculations based on the water/sewer usage of some actual village properties, she felt the rate structure suggested by Engels was going to have a severe, negative impact on customers.

"I couldn't believe the effect it was having on some of the bills," she said. "It's going to be a hit in the head with a concrete block."

Under Engels' proposal, the water and sewer base rates would have been based on meter size the larger the meter, the higher the rate.

His monthly water base rates ranged from $16.45 for a -inch meter to $359.48 for a 4-inch meter. His monthly sewer base rates ranged from $21.25 for a -inch meter to $464.38 for a 4-inch meter.

Although Helmuth believes the village has to get some type of new rate structure "in effect right now," she doesn't want "to put a fix in (place) and end up overcharging everybody with these colossal rates."

"We've done this before and ended up with a lot more money than we thought we were going to end up with," she said.

It should be noted that under the rate structure proposed by Engels, the average village household that uses 4,000 gallons per month would actually pay less than under the structure that's currently proposed.

In Engels' proposal, a household with a -inch meter and using 4,000 gallons would pay $68.22 per month a $20.45 (or 42.8 percent) increase.

Likewise, a household with a 1-inch meter and using 4,000 gallons would pay $71.47 per month a $23.70 (a 49.6 percent) increase.

As mentioned earlier, under the current proposal, the household using 4,000 gallons per month, regardless of meter size, would pay an additional $26.57 (or 55.6 percent more).

Right now, all village water customers pay a base, fixed rate of $18.10 per meter (regardless of its size) per month, which includes up to 2,000 gallons of water, whether they use it or not.

Likewise, all village sewer customers currently pay $22.85 per Residential Equivalent Unit (REU) per month, which includes up to 8,333 gallons of sewage per REU.

An REU is a unit of measurement equal to the average water usage of a single family home. A home is assigned a value of 1 REU whereas a business, such as a restaurant or car wash, can be assigned and pay for multiple REUs.

Under the village's most recent proposed rate structure, the free water and sewer included with the base rate would be eliminated and customers would start paying for every gallon they use.

The base rate is designed to pay the water and sewer systems' fixed costs, such as bond debts, which are not related to usage.

The base rate is basically the cost to have water and sewer systems in place whether a customer uses them or not.

The proposed rate structure would increase the water base rate from $18.10 to $21 and the sewer base rate from $22.85 to $26.50 per REU.

It would also increase the water and sewer flow rates.

Right now, village water users pay $3.41 for every 1,000 gallons, while sewer customers pay 51 cents per 1,000.

Under the proposed rates, water would cost $3.96 per 1,000 gallons and sewage would cost $2.75 per 1,000.

The reason for increasing the sewage charge by 439 percent versus the 16 percent increase for water is simple $2.75 per 1,000 gallons is what it costs the village to have its waste treated by Detroit.

Although the village owns and operates a local water system, the municipality sends all of its sewage to Detroit for treatment.

All non-residential sewer customers would also be responsible for covering the IWC charge from Detroit.

The village sewer fund currently absorbs this cost, which amounts to approximately $38,000 annually.

Under this proposed rate structure, commercial and industrial users would begin paying the IWC charge on a monthly basis based on the size of their water meter.

Based on the IWC charges slated to take effect July 1, a -inch meter would be charged $13.56 per month; a 1-inch meter pays $22.60; a 1.5-inch meter pays $49.72; a 2-inch meter pays $72.32; a 3-inch meter pays $131.08; and a 4-inch meter pays $180.80.

The aforementioned IWC charges would be assessed on top of the village's base and flow rates.

Village officials are considering raising water and sewer rates in order to cover operating costs, pay debts and finance future system improvements.

According to figures supplied by Young, based on the current rates, the municipality's water and sewer funds are each projected to lose $219,000 for the upcoming 2014-15 fiscal year, which begins July 1.

"We cannot afford to lose that kind of money," said Councilwoman Sue Bossardet.

The last time the village increased water rates was in September 2008 when they went up 5 percent. The base rate increased from $17.20 to $18.10 and the flow rate increased from $3.25 to $3.41 per 1,000 gallons.