Water usage by residential, commercial and industrial users in the City of Charlotte has seen a steady decline over the course of the last fiscal year. Because of this, city officials have recommended a nine percent increase in the city’s water and sewer rates to help offset declining revenues.
The proposal, which was analyzed by Charlotte City Council members during a special meeting Monday, May 16, calls for a 15 percent reduction in the base rate for water service, but a 24 percent increase in the base rate for sewer service.
“Water usage plays a big part in setting the rates,” said Christine Mosner, the city’s Finance Director and Treasurer, during Monday’s special meeting. “We need to try to garner enough revenue to meet the amount of total expenditures.”
Charlotte City Manager Gregg Guetschow said water and sewer rates are analyzed each year and recommendations are made based on expected revenues and expenditures.
“We have to look at what kind of money do we need to make not only to produce the services, but we also have to make sure we are putting money back into the infrastructure to ensure quality,” Guetschow said.
Cutting back on capital improvements in the coming year is one way council could avoid raising rates, at least in the short term, if water usage within the city remains stagnant.
“It’s a lot tougher to identify areas where we can economize,” Guetschow said of the city’s utility budget, which is comprised of a lot of fixed costs and infrastructure.
Guetschow said the council could also look at offsetting costs by utilizing money from the utility reserve fund, though he doesn’t think delaying capital improvements or dipping into reserves are in the best interest of council or Charlotte citizens.
Charlotte Mayor Tim Lewis said he knows this decision will be a tough one for council to make.
“No one likes taxes or something like water rates going up,” Lewis said. “There is another side to the issue. I think the real question is; if the nine percent is not met, what is the impact on providing services to the community? That is not something we can easily dismiss.”
The city’s top 10 water consumers have all shown a decline in usage in the past year. The city is estimating a 10 million gallon drop in usage for the 2015-16 fiscal year from the top 10 users alone.
The most significant reduction though, came from residential users, Guetschow said. He said the city has some theories as to why the residential usage is down.
“We believe there is some reflection on vacancies, people having moved out of town,” Geutschow said. “We also think there is a fairly significant impact of people as they replace fixtures in their homes, they are using less water with those things and we think that is a trend that could continue for some time.”
Residential consumers make up 53 percent of the overall water and sewer usage within the city.
When setting the 2015-16 budget, Mosner said she anticipated selling 280,000,000 gallons of water. The city ended up selling 258,000,000 to residents and businesses in the past year. Mosner projected total revenues between water and sewer to be $3,637,940 for fiscal year 2015-16. Revenues actually came in at $3,432,000.
Base rates are established depending on the water meter size a consumer has. Most residential customers have a 5/8-by-3/4-inch meter and are currently charged a base rate of $41 for water service and $62 for sewer service for a combined charge of $103 per quarter. The proposed rate increase would drop the water service base rate to $33, but increase the sewer service base rate to $81. In addition, the current commodity charge for water usage is $2.75 per 1,000 gallons of water, which would drop to $2.45 per 1,000 under the new rate. The commodity charge for sewer service is currently $4.50 per 1,000 gallons and would increase to $5.35 per 1,000 gallons under the proposed rate structure.
The resolution calling for the nine percent overall increase is up for a first reading during the Monday, May 23 Charlotte City Council meeting, which will be held at 7 p.m.