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City restructures water, sewer utility rates

MARYSVILLE — In an effort to bring more equity to utility customers and promote conservation, the Marysville City Council voted 4-2 Monday, Jan. 25, to implement new rate structures for residential and commercial water rates and for commercial sewer rates.

According to city officials, the new rate structures are revenue neutral, meaning they do not raise additional money for the utilities. “We want to be as fair as possible which is why we went through this process,” said Public Works Director Kevin Nielsen, referring to the cost-of-service study and the new rate structures. “We wanted to ensure each customer class is paying the appropriate and fair share.”

Under the old water rate structure, all customers were charged a base charge that was fixed (based on meter size) regardless of the amount of water used, and a volume charge for all water use above their allowance (fixed amount of volume that is included in a customer’s base charge). So, for example, under the old rates a residential customer with a 5/8 inch meter had an allowance of 6,000 gallons with a volume rate for usage over the allowance. That meant a residential customer who used 3,000 gallons paid the same as a customer who used 6,000 gallons.

“Now customers will pay based on whatever they actually use which we believe is more equitable to all of our customers,” said Nieslen.

The new residential rate structure reduces the existing base rate by 20 percent and adds a volume charge based on a four-tier system. Under the tier system, customers using up to 6,000 gallons would pay a volume charge of $.98 per 1,000 gallons. The second tier rate (for 7,000 to 20,000 gallons) is $3.43 per 1,000 gallons; tier three rate (21,000 to 30,000 gallons) is $3.92 per 1,000 gallons; and the tier four rate (31,000 gallons and higher) is $4.41 per 1,000 gallons.

While the tier 1 rate is significantly lower than the others, Nielsen said an average residential customer uses 11,000-12,000 gallons in two months which means the tier 1 represents only a small portion of the utility’s customers - mostly seniors and single-person households.

Commercial water customers will also see a change in the way their bills are calculated. Under the new rate structure approved by the Council, the city used American Water Works Association meter factors to determine new meter rates for meters larger than 5/8 inch. The new AWWA meter factors are an increase over the old meter factors and relate the maximum water that can flow through larger meters to that of the flow of a standard 5/8 inch meter.

Under the old structure, a 1 inch meter had a meter factor of 1.96 while the new AWWA meter factor is 2.5. To get the base rate for the various meter sizes, the new structure takes the bi-monthly rate for a 5/8 inch meter and multiplies it by the meter factor for the larger meter. The goal is to promote equity by billing customers with larger meters a bi-monthly base charge that more accurately reflects the potential flow through the meter. The base rates include an allowance of 6,000 gallons which is billed at $0.98 per 1,000 gallons — everything over the 6,000 gallon allowance is billed at $2.45 per 1,00 gallons.

For example, under the old commercial rate structure, a commercial customer with a 2 inch meter using 10,000 was billed the same amount as a similar customer using 48,000. Now both customers would pay the same base rate. In addition the first customer would pay a additional volume charge on the 4,000 gallons used over the allowance, while the second customer would pay the additional volume charge on the 42,000 gallons over the 6,000 gallon allowance.

The Council vote also included restructuring the commercial sewer rates. The residential rates were not affected.

According to the city, the current commercial rates “do not represent the true cost to pre-treat and treat waste, do not adequately address high costs for higher strength customers, do not charge the same rate for commercial and residential customers with equal strength of waste and water usage, and to not differentiate between commercial customers with low to moderate water.”

The new commercial sewer rate structure will “continue minimum bi-monthly rate equal to the rate charged to single-family customers, implement proposed rate increase to commercial volume rates and implement a commercial sewer base charge.”

The original proposal had also included a recommendation to increase all sewer rates by 8.6 percent. Council members expressed concerns about how that increase would impact local businesses and after some discussion approved a 4 percent increase in 2010 and the remaining 4.6 percent increase in 2011.

Council members Carmen Rasmussen and Lee Phillips voted against the rate restructuring.

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