Water, sewer rates in Chelan to go up in 2019

CHELAN – Residents of Chelan will see an increase in their monthly water and sewer rates starting as early as 2019.

During the last budget City of Chelan council workshop on Oct. 25, the FCS Group presented new water and sewer monthly rates to the Chelan Council members.

Project Manager Andy Baker, Senior Consultant Brooke Tacia and Analyst Luke Slaughterbeck conducted a 2018 study to help set long term financial management plans, while ensuring financially sustainable utilities and evaluating the cost-of-service and rate design.

The rate study consisted of three steps, first they had to find out how much revenue is needed, who causes those costs and how to charge.

From there the FCS Group was able to calculate results for a 10 year period, focusing on the next five years the most.

It was found that $11.4 million will be needed in the upcoming years to fund the capital improvements plan. That cost covers annual pipe replacement, collection system upsizing, lift station improvements and media replacement.

Such amount of money will mainly come from debt issuances in 2020, 2022 and 2024 equaling 69 percent of the total cost. The remainder of the money will come from General Facility Charges and Rate Funded Capital.

Based on the findings a rate design  was completed along with recommendations from the FCS Group.

They suggest to continue with the monthly charge per ERU, for all customers along with incorporating the Utility Tax in the rate, this way billing is simplified.

For example, in 2018 the monthly rate per ERU is of $36.58 plus the Utility Tax per ERU of $3.48, which is equal to $40.06. In 2019, the monthly rate will be of $43.46 with the Utility Tax already included.

In the last four years there has only been a 1.5 percent increase to sewer rates, therefore FCS Group recommended rate adjustments. In the next two years residents will see rates raise by 8.5 percent.

The water rate study, had a different story. In the 10 years FCS Group estimated that $33 million dollars will be spent for capital improvements.

That is $370,000 a year for pipe replacement, $8.3 million for transmission/distribution system improvements. The Water Treatment Plant capacity expansion alone will cost $14 million, however this improvement will not be needed until approximately 2027.

More than half of the funding for the improvements will come from the new debt issuances.

In the next five years water rates will increase by 5.75 percent, it will not be until 2024 when residents will see a drastic 15 percent spike.

Peak demand for water comes mainly from single family homes, while it was found that multifamily homes do not.

Based on this, rate design recommendations were given to the Council deal with including Utility Tax in the water rate, removing separate booster charge, setting the indoor water use allowance at 7,000 gallons per unit and establishing a “peaking tier” at 40,000 gallons per units which would only apply to single family and multifamily homes.

Those who reach the “peaking tier” will then be charged per gallon after the established 7,000 gallons. Which means that during the summer time residents could potentially see their billing statement increase.

When it comes time for the new rates to kick in, the City will make communicate why they are doing it, while also focusing their attention in educating residents on water conservation.