All water users in Ketchum will pay more starting in July, due to a rate increase passed by the City Council on Monday.
How much more depends on a customer's water use. But the rate increase isn't as harsh as the one that the Utilities Department originally proposed at a June 7 City Council meeting, especially for those on the lower end of the use scale.
At the request of the council, Utilities Department Manager Steve Hansen appeared again Monday to present amended rate increases that would lessen the impact to average customers. The council unanimously signed off, putting the changes in effect July 1.
The hike is between 12 and 79 percent for those using less than 120,000 gallons a month.
The average customer—using 65,000 gallons a month during the summer—currently pays $72 a month. The new rates would increase that to $97, a 35 percent increase. That's nowhere near the leap of the original increase proposed June 7, which would have increased that customer's rate by 71 percent to $124.
Customers using more than 120,000 gallons a month—considered excessive—will see their water bills at least double. The new rates' four-tiered billing structure makes water more expensive as more is used. The fourth tier sees the biggest jump, with water costing $4.35 per thousand gallons compared to $2.90 for the third tier.
The original rate increase consisted of only three tiers, but the council requested that a fourth be added to persuade high-end users to conserve.
Hansen told the council on June 7 that 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. He said the city needs a "rate fix," not just a rate increase.
Currently, the city has no base rate charging customers a fee just to be hooked up. Hansen said a base rate covers costs that happen regardless of water being used. These costs aren't currently being covered, but the rate increase's new $9.05 base rate per customer would fill that gap.
Hansen said another problem is that rates haven't increased enough in the past five years. Rates went up an annual 4.9 percent from 2006 to 2008, and no rate increase occurred in 2009 because the department was waiting on a water-rate study done by JUB Engineers that included this rate increase.
The department will draw upon its reserve fund to pay this year's $460,000 bill, but Hansen estimated that next year's costs, including capital projects, would be 25 percent higher at $1.75 million. And that cost would persist for 15 years as the city undertakes its capital-improvements plan to keep the system up to date.
Hansen said the originally proposed three-tiered rate increase would generate enough revenue to cover these costs. But, business owners argued, the increase was too much to bear at a time when they're hanging on by their fingernails.
Hansen altered his projections during Monday's meeting when he said the department had delayed a proposal for two pipeline projects. That lowered annual projected costs from $1.75 million to $1.67 million, and enabled Hansen to reduce the rate increase.
Trevon Milliard: tmilliard@mtexpress.com
The rate increase approved Monday will cost average users less than the increase first proposed by the city. Express graphic
