Jane Larson McLaughlin
BG Independent News
The City of Bowling Green sold more water than expected last year, but received less wastewater treatment than planned. As a result, the proposed rate adjustment for both services has changed as water revenue has increased and wastewater revenue has decreased.
The city’s Public Utilities Commission voted last week to delay proposed increases in water rates and speed up increases in wastewater rates. The results will be a baptism for most Bowling Green customers this year, said utility executive Brian O’Connell.
“I never went back and asked the board to adjust the rate schedule,” O’Connell said last week.
But after seeing higher-than-expected revenue from water sales, O’Connell asked the board to postpone the water tariff adjustment, originally scheduled for April 1 this year, to April 1, 2023. The proposed water rate adjustment would increase the cost of 500 cubic feet of water to residents ranging from $12.21 to $12.80 per foot.
Some of the increased water sales came from the wholesale water contract Waterville joined the city. Plus, “businesses and people are using more water,” O’Connell said.
“These numbers don’t always happen as expected,” he said. “We really don’t need to keep increasing the capital balance.”
Wastewater revenue, however, is the exact opposite.
“Revenues haven’t kept up with our expectations,” O’Connell said.
One possible reason for some of the reduction is that more efficient systems and equipment send less flow to the wastewater system.
Therefore, while the water tariff adjustment will be delayed, the wastewater tariff will be earlier than originally scheduled.
The sewage treatment fee adjustment originally planned for January 1, 2023 will be changed to July 1, 2022. The next increase in wastewater treatment fees, scheduled for January 1, 2024, will be delayed until January 1, 2023.
The proposed wastewater rate will first go from $21.25 per 500 cubic feet to $21.50 and then to $21.75 a year later.
“The goal is to direct the revenue to the utilities that need it most,” O’Connell said.
“We will continue to monitor funding balances throughout the year,” he said. “If water sales are really good, maybe we can hold off for another year.”
Utilities hire rate consultants to conduct cost-of-service studies and help cities develop rate tables. The study forecasts future expenses and sales revenue based on the latest financial information and sales history. It also takes into account any financial or sales changes that employees expect in the coming years.
The study attempts to balance expected future expenses with expected future sales revenue and adjust rates accordingly. The study also helps utilities allocate costs to each customer class (residential, commercial and industrial) so that one customer class does not subsidize the rates of another.