City considers water, sewer rate increase

In a move designed to better align rates with the cost of service and plan for the future, the city of Whitefish is considering an increase to its water and wastewater rates.

If approved, the standard residential water user would see an increase of 1 percent, or about 25 cents per month, from $40.53 to $40.78 on their bill. The monthly standard wastewater user would see an increase of $4.53 or 13 percent, from $35.04 to $39.57. These figures assume usage of 4,000 gallons of water and wastewater per month.

“For the average bill, it’s going to go up $5 per month,” Public Works Director Craig Workman said.

The city is also considering an increase for irrigation meters by 15 percent or about $5.34 per month, from $35.46 to $40.80, for those with usage of 10,000 gallons per month.

Whitefish City Council will hold a public hearing and vote on the proposed changes at its Tuesday, Sept. 6 meeting at 7:10 p.m. at interim City Hall. If approved, new rates would go into effect Oct. 1.

The proposed increases come after the city recently completed a comprehensive water and wastewater rate study. Based on recommendations of the study, the city is proposing to increase the water and sewer utility rates because it says the increases are necessary to cover the cost of service, and provide for necessary capital improvement projects.

“We recently went through an elaborate cost of service analysis to take a comprehensive look at our expenses and revenue,” Workman said. “What we found was that we’re not meeting our expenses. The city of Whitefish has been proactive about raising rates based upon the industry standard and that’s financially prudent for the city.”

Another objective of the rate study was to help prepare the city for new regulatory standards expected to be implemented by the Montana Department of Environmental Quality. The city’s existing wastewater treatment plant is not expected to meet the new standards. A new wastewater treatment plant is estimated to cost $15 million to $20 million.

The study suggested by making adjustments to the sewer rates, it will prepare the city for debt association with constructing a new treatment plant.

Workman said the proposed increases to the wastewater rates are primarily driven by the cost for constructing the new treatment plant.

“We knew we were going to embark on the design of the wastewater plant and the City Council decided we needed to study rates,” Workman said. “It’s wise financial planning ahead of such a large project to do a study. We can now plan for rate increases spread over time rather than one increase later.”

The increase in wastewater rates does vary depending on which sewer service class a home is located in. The city has three services classes for wastewater. Certain areas within the collection system require significant pumping to convey the wastewater across town to the wastewater treatment plant, according to the city. A wastewater user in the third service class, which generally requires the wastewater to be pumped three times to the plant, and using 3,000 gallons per month would see an increase of $4.48 per month, from $69.75 to $74.23.

Those that live in one of the five pressure zones for water throughout the city could see a greater increase in their water bill than the standard water user. A standard residential user inside a pressure zone, meaning the elevation of their home compared to the city’s water reservoir requires pumping, and using 5,500 gallons water per month would see an increase in their monthly bill of $2.78, from $55.81 to $58.59. There are additional costs associated with pumping, storage infrastructure and related labor/materials associated with providing service to the high elevation pressure zones, according to the city.

The increase in irrigation-only rates is recommended as a way to end subsidization of those rates by other users. The study notes that the irrigation users are not “generating revenue in line with the cost of service associated with irrigation water use” and as a result the other users are footing the bill.

The city of Whitefish has historically subsidized outdoor water use in an effort to promote citywide beautification. Whitefish customers receive a reduced charge on water used for sprinkling and an averaged sewer charge during the five monthly billing periods from June through October. The city says it’s working to achieve a balance by charging irrigation rates that are more reflective of the cost of service while also not reducing irrigation practices.

Workman said the increase in irrigation rates would effectively discontinue a portion of that subsidy. The city has to treat water used for irrigation just as it does drinking water and that comes with costs, he noted.

“People will still be able to water their lawn,” he said. “We’re hoping that this is going to help them be more efficient in how they water.”

The city contracted with AE2S engineering firm last spring to conduct the rate study. The last time the city conducted a water rate study was 1998. A wastewater rate study was done in 2009.

While the city is only currently considering increasing rates for this year, it is not likely the only increase water and wastewater users could face in the coming years. The rate study recommended increasing water rates by 3.6 percent over the next five years, while wastewater rates could increase by as much as 95 percent over the next 10 years.

Standard residential water users could see a slight increase from the current monthly bill of $40.53 to $41.98 in 2021.

Residents with the most common standard residential wastewater service, which generally includes the downtown area, could see their monthly bill increase from $31.82 currently to $62.10 by 2026.

The most common irrigation customer with a 5/8-inch meter could see an increase of about 35 percent over five years, with their monthly bill increasing from $35.48 to $47.76 in 2021.

Workman cautions that those increases will be considered year-by-year in the future. The suggested increases for the wastewater rates do not factor in for grants or low interest loans the city may obtain for construction of the wastewater plant, he noted.

“We want to try to be as conservative as possible and find the most cost-effective ways to fund it,” he said. “We are making every effort to obtain grants and low interest loans to finance the project.”

In addition to proposed rate increases, the city is also considering changes to its low income and senior discount that would make the change from an age-base system to an income verification system. The current policy extends a discount on the base rate portion of water and wastewater bill to those who qualify for the Low Income Energy Assistance Program through the Montana Department of Public Health and Human Services. The city is looking to eliminate the part of its policy that gives a discount to senior citizens age 65 or older.

The city provides water service to about 3,250 residential customers and 320 commercial customers within the city limits, as well as 68 residential and seven commercial customers located outside city limits.

The city provides wastewater service for about 3,530 customers within the city and 106 customers outside of the city limits.

For more information visit the city’s website at www.cityofwhitefish.org/public-works/2016-utility-rate.php