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Bonners Ferry holds special meeting
to discuss water, sewer rates |
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August 12, 2014 |
(Story begins below this photo:)
"We are in a zero sum game in our utilities,"
Mayor David Anderson stated to start off Tuesday
evening's special city council meeting, held to
advise city residents and other utility users of
water and sewer expenses, rates, and capital
improvements.
Mayor Anderson explained that rates for city
water and sewer services are not set with making
a profit in mind, instead they are based solely
on the cost of providing those services to city
customers. In addition to the day-to-day expense
of running the water and sewer facilities, the
costs of providing those services can include
anticipated costs for new capital improvements,
anticipated repairs, depreciation of equipment,
and other factors.
Mr. Anderson went on to say that ideally what
the city charges for those services will be the
aggregated cost of providing the services. "We
don't even give ourselves water or electricity
(at no charge)," he stated. Instead, city
departments are billed for their water and sewer
use just like any other customer. This is done
to make sure that the rates and costs for
services are not skewed by a big user--the
City--that is not paying for the services it
receives.
Complex calculations
However, calculating exactly what the cost is to
provide water and sewer services is a complex
process, since it has to take into account
forecasts of capital improvements, anticipated
repairs, depreciation of equipment, debt
service, forecasts of revenue, maintenance of
adequate emergency reserve funds, anticipated
bad debt, and other factors.
Because of the complexity of accurately
compiling all of the necessary data, distilling
the information, analyzing the rates paid by
various groups for their water and sewer
services (such as residential customers,
non-residential customers, commercial users, and
so forth), the city retained the services of a
consulting group that specializes in doing rate
studies and provides analyses that cities can
use to make fair decisions on setting what rates
should be.
In attendance at this special meeting was Gary
Saleba, President and CEO of EES Consulting, a
company with offices in both the Seattle and
Portland areas. EES consulting offers a variety
of engineering and management services,
including preparing cost of services studies and
rate determination and recommendations.
Consulting firm's analysis
Mr. Saleba gave a presentation which summarized
his company's analysis of Bonners Ferry's water
and sewer rate situation. His report, available
for review at City Hall, looked closely at all
of the factors noted above, and also considered
several different scenarios that could affect
what fair rates for water and sewer services
should be. Those scenarios include, for example,
different amounts of emergency funds the city
would like to have in reserve.
In making recommendations for the city's rates,
Mr. Saleba stated that the objective is that
everybody pays their fair share. "There's no
profit motive," he added.
Will our rates be affected?
The City Council made no attempt to
make a final decision on any rate changes or
adjustments at this meeting. It will take some
time for them to review the EES Consulting
recommendations and accompanying analyses.
It appears, however, that some rate changes or
adjustments may well occur eventually. Mr.
Saleba showed his company's calculations seem to
indicate that some groups who receive city
services appear to be paying more than what the
actual cost is of providing those services to
them, while other groups are paying less than
the calculated cost of providing their services.
For example, the EES data show that, during the
study period examined, residential customers who
live inside city limits paid almost $55,000 more
for their water than the calculated cost for the
city to provide that service to them. Meanwhile,
revenues from commercial water users within city
limits were about $54,000 short of what it cost
to provide their water services.
The overall revenue from all groups who receive
City water services fell short of the cost of
providing those services by about $39,000. It's
numbers like those that seem to point toward the
possibility of the City adjusting its rates to
make them more fair for all groups. The City may
even consider raising rates to make up for the
$39,000 shortfall needed to cover the total cost
of providing water services.
For now, the City Council plans to review the
reports and recommendations from EES Consulting,
with final decisions on the complicated rate
questions for water and sewer services to be
determined in coming weeks or months.
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