The Chelsea Standard
A Heritage Newspaper
Weekly Publication
Chelsea rates going up
By Edward Freundl, Heritage Newspapers
PUBLISHED: March 15, 2007
Chelsea residents will pay more per month for water, wastewater and electric services under new rates approved Tuesday by the City Council.
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Consultant Mark Beauchamp of Utility Financial Solutions of Holland presented the council with the results of a comprehensive cost-of-service study, and recommended modest increases in rates for all three city-supplied utilities. Although several residents were present, no one spoke for or against the proposed changes during a public hearing, so the council voted unanimously to approve them after Beauchamp's presentation.
The new rates will go into effect with the billing cycle beginning March 23.
To meet financial goals of self-sufficiency for each of those departments, rate increases of 10 percent for water, 15 percent for electricity and a whopping 35 percent for wastewater treatment were studied.
"We tried to phase these in over a period of years to minimize the impact on the customer," Beauchamp said.
The typical residential water commodity rate will increase by only 7 cents, to $5.48 per 1,000 gallons, and the billing charge will go from $4.35 to $5.75 per month.
Wastewater treatment fees also will go up slightly, with the basic volume charge increasing 13 cents to $3.26 per 1,000 gallons and the billing charge rising from $5.83 to $7.50 per month
Small commercial, large commercial and industrial customers also will see an increase in water and wastewater rates, largely dependent on their monthly usage.
The increases were necessary to ensure the financial solvency of the departments' debt service, maintenance and reserve funds, Beauchamp said.
"The water department projected $317,000 in connection fees, but they actually received about $200,000 or less," he said, noting that the dropoff was due to a slowing economy and the failure of development to occur as expected.
The wastewater budget was in better shape, he said, with a cash balance of $3.5 million and reserves of about $835,000.
"That's below what we projected, but we have enough as a buffer," Beauchamp said. "We wanted to stay above $700,000."
Electric rates were not nearly so straightforward, with tier upon tier of service and different rate formulas for residential, commercial and industrial classifications.
Cash reserves for the department were "quite low" at $193,000, Beauchamp said, but still better than the projected figure of only $150,000.
The additional revenue was due to a meter calibration problem with some large industrial customers that was discovered and remedied.
Because of that, as well as a 15 percent bump in rates last year, Beauchamp recommended increases in typical residential rates of only 2 percent this year and in 2009, and none in 2008 and 2010.
Commercial, industrial and some residential rates will increase from 1 to 3 percent, depending on a number of factors.
"With these increases we will reach our minimum cash balance target of $1.8 million in 2011," Beauchamp said.
"The typical residential customer should see their bill for water, wastewater and electric go up about $6.40 a month," he concluded.
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