Wednesday, June 9, 2010

Ketchum eyes big hike in water fees

Average user could pay 71 percent more


By TREVON MILLIARD
Express Staff Writer

Steve Hansen, Ketchum utilities department manager, describes the proposed water-rate increase. Photo by Willy Cook

The water bills of Ketchum residents and proprietors would, at most, double come July if the City Council approves a new rate system of three tiers that makes water more expensive as more is used.

The average customer—using 65,000 gallons a month during the summer—would be shelling out $52 more a month, a 71 percent increase over the current $72 rate. Those using 94,000 gallons or more a month would be paying double. And, at the least, customers using no water would be subject to a 10 percent rate increase because of a proposed $9.62 base rate that currently doesn't exist.

Steve Hansen, Ketchum utilities department manager, said at a City Council meeting Monday that a base rate is needed to cover costs that exist regardless of water use.

Currently, customers pay $8.72 for the first 5,000 gallons, no base rate. Three tiers already exist above that to increase the price per thousand gallons at each tier. But the proposed change would shift those tiers and, on average, about double the price of city water.

"This is not only a rate increase, but a rate fix," Hansen said.

He said rates have only gone up an annual 4.9 percent to meet inflation from 2006 to 2008, and have not been adjusted to cover increasing costs or $370,000 a year in projects needed to keep the system running.

And no rate increase occurred in 2009 because the department was waiting on a water-rate study done by JUB Engineers that included this proposed rate increase and two others making water more expensive for everyone during peak season. Hansen said he prefers the tiered system because it's more lenient on the average user.

Hansen said the rate increase would prompt conservation, but it's also needed to "pay the bills." The department is operating at a $460,000 loss this year, estimating that customer revenue would generate only $950,000, compared to $1.4 million in expenses. The department will draw upon its reserve fund to pay this $460,000 bill, but Hansen estimates next year's costs, including capital projects, would be 25 percent larger at $1.75 million.

"We have not been adjusting rates as high as we should've been in the past five years," he said. "It's clear now that we're depleting our enterprise funds and need to fix it."

But residents and business owners at Monday's meeting didn't want to hear about balancing costs and revenue or promoting water conservation.

"I don't think it's appropriate to kick us while we're down," said Kevin Stuessi, owner of Sego restaurant, claiming restaurants cannot "bear the burden."

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Alan Pennay, owner of a 19-unit condo complex renting by the night, called Pennay's at River Run, said his units use a mere 5,000 gallons each per month. His total monthly payment would jump from $165 to $299, an 80 percent increase

"It's easy to not support this initiative," he said.

The council and mayor tried to come up with ways to lessen the impact on already struggling businesses but made it clear that a rate increase is needed now.

"Business owners are making a strong argument," Mayor Randy Hall said. "But we don't have much of a choice here."

He said the water department needs to pay its bills.

Councilman Larry Helzel recommended that businesses be given a year break on the rate increase.

"If we could afford to do it, it would be fair," he said.

Council members Baird Gourlay and Nina Jonas weren't in favor of such an exception. Gourlay said two issues are at hand: paying the bills and promoting water conservation. He said something needs to be done now because summer sees peak use. And, he said, businesses could be more efficient.

"If we don't use the stick, we're not going to get 'em," Gourlay said.

Jonas was of the same opinion.

"I think it's imperative to act now to conserve water," she said.

To make the punishment harsher for high-end users, Helzel suggested that a fourth tier be added for those using in excess of 100,000 gallons a month.

To that, the entire council agreed, but it will come later. The council must vote on the rate increase at its June 21 meeting to put it into effect for July. Adding a forth tier would require 15 more days of process because of the required public hearing.

Trevon Milliard: tmilliard@mtexpress.com




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