Paying for water


First Posted: 4/13/2014

LIMA — The price of gas or heating fuel prices is a common topic among consumers when talking among friends.

However, costs incurred for paying for water sources is seldom mentioned. In the future, rising water prices could also become a frequently discussed topic.

In the first study of its kind, the USA Today 2012 study found that percentage-wise, the rising cost of water outpaces all other utilities. Water and wastewater rates are essentially set up as non-profit endeavors, leading to lower costs to consumers. The study showed that from 2000-2012, water costs doubled or tripled in some areas. In a resource long taken for granted, the study found that the resource will continue to be more costly for Americans over the next several years and has not yet crested.

Those changes have caused several area municipalities to re-evaluate water and wastewater rates for its consumers in the Lima area recently. Lima Utilities Deputy Director Mike Caprella said the low costs of water prices can often cause customers to not recognize higher rates, even when they are high percentage-wise.

“You don’t like to raise utility prices until you need to,” Caprella said. Traditionally, municipalities do not keep high balances on utility accounts. You don’t revisit them until you need to.”

The city of Lima recently reevaluated its water rates and approved a nine percent hike for minimum users. However, that nine percent reflects only a $1.25 increase to the bills of its customers.

“The rates are so low, people don’t usually notice the increase,” Caprella said.

Caprella said the rates had to be changed largely to several large capital projects, including $29 for a reservoir, $15 invested in the water plant, $2 million to redo the pumps at the Westside Reservoir, and other projects.

“The debt was coming due, and we have to past on those costs,” Caprella said.

Caprella said chemical costs to provide clean water and operational costs also have an influence on water costs. The study showed that our area, which centered around Akron, had experienced a raise of about 35 percent in water costs over the study period. It also gave those reasons, among many others, for the rise in rates.

The study showed the trend to be driven by paying off debt on bonds, increases in electricity, chemicals and fuel prices, compliance with clean water mandates, rising pension and health care costs for water agency workers and increased security safeguards. The study revealed that approximately $1 trillion in infrastructure improvements would be needed by 2035 to meet drinking water needs.

In the village of Minster, the council approved the initial reading for a hike in water rates after a study was completed by Courtney & Associates in February. Billing statistics and financial data concerning the water department along with projected revenue requirements dictated a nine percent increase. Council will approve the hike at its final May meeting.

“The revenues at the current rates are not sufficient to meet projected revenue requirements,” village administrator Don Harrod said. “Sometimes we can just absorb the costs. It was to the point where we couldn’t do that this time.”

Dave Sprague with the St. Marys Water and Sewer Department said rates were adjusted for the first time in the city for 17 years in 2013. Customers were given a 17 percent rate increase in 2013 and again in 2014. This year’s hike took effect in March.

“It’s just something you have to do from time to time,” Sprague said. “There are a lot of costs involved. People want to make more money doing their job. Expenses for things you need go up. You have infrastructure costs.”

In Elida, the village recently had the second reading of an ordinance that will hike their water rates by about 20 percent. The reason for the increase was much simpler, as they are serviced by the city of Lima.

“Our water rates had not been touched for quite some time,” said Mayor Kim Hardy.

The increase required an approximate $4 increase to village residents and customers outside of the village will see an increase of between $3 to $8.

“We wanted to be easier on the inside rates because those people are inside the village and they pay income tax,” Hardy said. “Our inside and outside rates differ by about 50 percent. Everyone seems to understand this is something that has to be done.

A secondary increase of $2 to $3 per month will take effect in Jan. 2015. The third reading of the ordinance approving the increase in Elida is scheduled for April 23 and would take effect July 1.

All agreed that trying to stay ahead of water mandates from state and federal government caused a need for looking at water rates.

“Sometimes we have absorbed the cost in the past,” Hardy said. “However, we have to have the funds available to keep it running.”

In Delphos, the village was hit with a double whammy on its water costs. The village had already been looking at a possible hike when a major customer closed down it’s business in the town. The water fund is projected short by $320,000 into 2015. Orval Kent went bankrupt in the community in 2012. Reser Foods bought the business out of bankruptcy but closed the doors in July 2013. Council projects a water rate increase regardless of a municipal tax levy on the ballot in May but said that increase could be even larger if the levy failed in order to balance the water fund.

The study said water costs varied greatly because of geography, climate, population, and borrowing costs as factors, making it virtually impossible to compare water rates from city to city.