Source: Sherman Publications

Twp. hikes sewer rates

by CJ Carnacchio

August 17, 2011

Beginning in October, Oxford Township sewer customers will see an increase in their biannual bills due to rising costs from Detroit and Oakland County.

Township officials last week voted 5-1 to raise the non-metered sewer charge from $67 to $86 per Residential Equivalent Unit (REU) per six-month billing cycle. This primarily affects residential customers.

They also voted to increase the metered sewer rates from $17.50 to $23 per thousand cubic feet (mcf). This primarily affects commercial customers.

“We have outside forces acting upon us,” said township Treasurer Joe Ferrari. “There’s nothing we can do.”

An REU is the estimated average sewer usage of a single family home. One home equals one REU.

The township bills its sewer users twice a year, once in April and again in October. Approximately 80 percent of the township’s sewer customers are non-metered, the rest are metered.

The reason for the increase is simple – if the township doesn’t increase revenue to the sewer fund, according to calculations from Trustee Mike Spisz, it could run out of money in approximately two years.

“I think this board needs to highly consider an adjustment to the sewer rates at this point,” he told his fellow officials.

The calculations presented by Spisz show that even though the sewer fund’s fund balance is approximately $5.355 million as of June, it could be quickly depleted over the next two years.

Three factors are driving this depletion – a cost increase from Detroit that took effect in July; Oxford’s portion of the cost to repair the Oakland-Macomb Interceptor (OMI) Drain; and projected shortfalls in the sewer operation budget.

Trustee Sue Bellairs emphasized all these factors are “uncontrollable by this board.”

“These were things that have nothing to do with us,” she said.

Last month, Detroit, which provides sanitary sewer services to Oxford, increased the rate it charges by $1.24 per mcf.

Add to that, the township’s share of repairing and rehabilitating the OMI Drain, which is the sole conveyance conduit for transporting wastewater from more than 830,000 Oakland and Macomb residents to the Detroit Wastewater Treatment Plant.

This five-year project, which began in 2009, is expected to cost approximately $140 million and is being financed through a series of bonds. The cost is being shared by 12 Oakland communities, including Oxford Township and Village, and 11 Macomb communities.

Oxford Township is currently paying the first bond out of its sewer fund at a rate of approximately $4 per REU per year and approximately $1 per mcf per year. The township has not passed this additional cost onto its customers. Last month, township officials voted to pay their share of the second bond in one lump sum of $1.015 million.

It’s estimated the third and fourth bonds will cost the township $1.71 million and $613,980, respectively.

The township sewer fund is also facing operating losses totalling approximately $1.7 million between this year and 2013. Last year, the fund lost $681,799.

Spisz explained to this reporter that these operating losses are due to two factors – 1) the township’s cutting of sewer rates in 2009, which stopped the fund from earning a profit; 2) the township’s lack of new construction, which has meant no additional sewer customers and tap fees.

Spisz noted the newly-adopted rates “will not eliminate the (sewer fund) shortfall.” However, they will help the problem.

Spisz told the board he favors an incremental approach to raising the sewer rates as opposed to “hitting (customers) with the total all at once.” He reasoned that this way sewer customers can at least save some money this year.

Even though sewer customers will see an increase on their October bill, township officials were quick to point out it’s still less than they were paying two years ago. Back in 2009, the township was charging $63 per REU per quarter (or $126 biannually) for non-metered residential customers. “It’s still less than we were paying before,” Bellairs noted.

The township’s new non-metered biannual rate of $86 is also cheaper than Orion Township’s residential sewer rate, which is $63.23 per quarter ($126.46 for six months), and Oxford Village’s residential rate, which is $22.75 per month ($136.50 for six months).

However, Oxford Township’s new metered rate still represents an increase for commercial customers, who were paying $20 per mcf back in 2009 and will now pay $23 per mcf.

“It’s not pleasant. Nobody likes it,” Ferrari said.