By Joe Smillie
Peninsula Daily News
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“If we do nothing, we're going to dry the reserves. We're going to use them up real quick,” consultant Ashley Emery told the City Council on Monday.
Repairs include fixing leaks in sewer pipes, replacing water pipes and adding capacity to the sewer system to prevent backups.
If the water rate remained steady through 2018, Emery and his firm, Peninsula Financial Consulting, predicted that the scheduled improvements to the water system would drain the water fund from what is expected to be a $452,400 surplus at the end of 2014 to a $5.6 million deficit.
The sewer budget would drop from a $1.7 million surplus at the end of 2014 to a $7.2 million deficit at the end of 2018.
Peninsula Financial Consulting was contracted by the city to study its utility rates, which have not been reviewed for a decade, Public Works Director Paul Haines said.
The council had raised water and sewer rates by 4 percent for all users in the 2014 budget.
The base rate for water service for a single-family home rose from $22.22 per month to $23.11 per month.
The base rate for sewer service rose from $58.42 per month to $60.76 per month.
The 4 percent raise did not address a problem of inequity in what those different classes of users pay for water, Haines said.
The city has a wide range of base service and consumption charges for single-family homes, multi-family homes, businesses, public facilities, irrigators, hotels and motels, and adult-care facilities.
Emery said he reviewed the city's rate structure and found that the varied rates “just didn't make any sense.”
“What you don't want to see is any given set of customers paying dramatically different rates than other customers,” Emery said.
Under the current rate structure, Sequim's residential water users, those in single homes or multi-family homes, account for 60 percent of the city's total billings, though they use 54.2 percent of the city's water.
Commercial users, irrigators and public facilities pay less for the water they use, accounting for 36.8 percent of billings and 40.2 percent of use.
“Commercial customers are really not paying their share of what they could be, based on the meters that are installed,” Emery said.
Adult-care facilities carry an especially light load of the city's water costs, he added, using 5.6 percent of the city's water and paying 3.2 percent of the city's bills.
The disparity is even greater in sewer billings, as residential users account for 74.5 percent of the city's billings, though their estimated actual sewer use is 60.1 percent of the whole system.
Commercial, public and hotel/motel users account for just 22.2 percent of billings, though use is estimated at 31.5 percent of the system.
Adult-care facilities account for an estimated 8.4 percent of the sewer system's use but just 3.4 percent of billings.
“The true equity might be to have everybody pay for every drop they use,” Haines said.
But Emery noted that that switch would put a “huge burden” on the six adult-care facilities, which would be saddled with $44,000 more in water charges in 2015 and $110,000 more in sewer charges.
“These impacts are so significant that we felt as a group they needed more of a phase-in,” City Manager Steve Burkett said of the consensus of a special subcommittee that looked at rate equity before the 2014 budget was passed.
The current base rate for residential users is $23.11 per month and eight-tenths of a cent per cubic feet up to 800 cubic feet a month. Those who use more than 800 cubic feet are charged 2.4 cents per cubic foot.
Emery suggested changing that to 600 cubic feet to encourage conservation, which would delay the need for the city to buy more water rights.
Emery's proposed rate changes, which include the city's various water and sewer rates, can be viewed on the city's website at http://tinyurl.com/PDN-sequimrates.
Sequim-Dungeness Valley Editor Joe Smillie can be reached at 360-681-2390, ext. 5052, or at firstname.lastname@example.org.