Ordinance Panel To Set Hearing On Proposed Water Rate Hike
On September 17, the Legislative Council acted on a request to initiate a phased rate hike for users of the Fairfield Hills water system, and moved the matter to its Ordinance Committee to research and set a date for a public hearing.
According to a memo and presentation by Public Works Director Fred Hurley, the Water & Sewer Authority (WSA) at its July 10 meeting passed a resolution to request that the Legislative Council consider and approve an eight percent rate hike for the users of the Fairfield Hills water system, for each of the next three years.
The request came before the panel September 17 because the ordinance changing the Water Pollution Control Authority (WPCA) to the WSA retained the authority to set water usage rates with the council. This would be the first rate hike in more than six years, Mr Hurley said.
He told the council that in the subsequent years after the last rate hike, the WSA had to undertake $1.4 million in upgrades and improvements to the water system required by the State Department of Health and OSHA. The work was also required to enhance general operations of the system.
“These projects have ranged from pipe and hydrant replacements to complete overhauls of the storage bunkers, wells, and central pump house and addition of an emergency backup generator,” Mr Hurley said in the memo.
The system could not have been sustained without these repairs and improvements to serve its critical clients, which include Garner Correctional Facility, Nunnawauk Meadows Senior Housing, Reed Intermediate School, Newtown Municipal Center, Second Company Governor’s Horse Guard, NYA Sports & Fitness Center, Federal Dog Training Facility, ConnDOT Garage, Newtown Animal Control Facility, Newtown Dog Park, five residences, and the new ambulance facility.
The funding was provided by the reserves of the WSA from the sewer side of the authority. However, the water users are required to pay back this advance, Mr Hurley said.
Over the next 20 years, it is anticipated that an additional $2 million must be raised both for capital improvements and to establish an adequate cash reserve fund balance.
Mr Hurley said the WSA’s current budget produces approximately $316,000 in revenue. Of this total, $193,000 is for direct operating expenses.
The remaining $123,000 is available for annual capital items and the repayment of the $1.4 million advanced by the Sewer Fund. However, after the $123,000 is reduced by $44,000 covering interest on the $1.4 million and $50,000 for additional annual capital items, only $29,000 remains for a principal payment.
At this revenue level, however, the Water Fund will never be able to pay back the entire $1.4 million; it will never have continuing adequate funds for annual capital needs and it will never establish an appropriate fund balance, Mr Hurley said.
“Inflation alone will continually drive up direct operating costs,” he added. “After the third year, inflation of 3.5 percent will eliminate any available funds for a principal payment at the current water rates.”
The solution, he said, is adding the proposed eight percent water rate increases to revenue each of the next three years and adjusting for inflation.
Currently, state facilities including Garner Correctional and DOT garage utilize 83 percent of water usage from the system, with Nunnawauk Meadows consuming about 9.4 percent, town facilities using about 7 percent with the remaining 0.7 percent of water going to private homes on the system.
Nunnawauk Meadows pays a subsidized rate that is approximately half the residential/commercial rate, the memo states.
The rate changes would extend from the current $7.30 per 1,000 gallons to $7.88 in year one if the increase is approved as proposed; $8.51 in year two; and $9.19 in year three.
Mr Hurley said while larger water utilities may charge less for water, when factoring in related delivery costs and fees, the proposed rates are in line with similar size small water systems.
He added that since the system is ultimately regulated by the state Department of Health instead of the state utility authority, several fees associated with those larger systems do not apply to users of the Fairfield Hills system.