The Lewes Board of Public Works approved rate increases for water and wastewater services Feb. 2, partly to fund upcoming infrastructure improvements.
The change will result in a monthly increase of about $1.65 for the average customer beginning April 1. In 2018, monthly bills for average customers will increase a little more than $2 from the current bill.
BPW directors faced pushback from some customers who attended a public hearing Feb. 1, as concerns were raised over the timing of the proposed increases, while other customers wanted to better understand why increases were necessary.
BPW General Manager Darrin Gordon said the city’s aging infrastructure will require major capital improvements in the coming years. The BPW has about $4 million more than the minimum reserve balance, but, Gordon said, the planned improvements without rate increases would take the BPW’s reserves below the required minimum.
“That minimum reserve is for emergencies,” he said, noting the current minimum reserve has been verified as appropriate and accurate.
Gordon led a presentation on the rate increases, walking through each utility’s needs and how rate changes will affect customers’ monthly bills.
The proposal came to the public after several months of discussion among BPW directors and consultant Utility Financial Solutions, a company that specializes in utility rates.
According to Dawn Lund, vice president of UFS, the BPW’s most urgent need is for the water utility. At its current rate, she said, the BPW’s water utility would be operating at a loss beginning in 2019; the deficit would only grow if unaddressed, she said.
To generate more revenue, she recommended and the board approved a rate increase of 6.5 percent annually from 2017 to 2021. Customers should expect to see their fixed customer service charge increase $1 in 2017 along with a slight increase in the usage fee. In forthcoming years, only the usage fee will increase.
As for wastewater, BPW officials will raise rates 2 percent every other year, beginning in 2018. A 2 percent increase would mean a $1 monthly increase to the average customer.
Gordon said the board went against a recommendation to increase rates 15 percent in 2011, 2012 and 2013. Also, the board did not move forward with increases to the ready-to-serve charge that would’ve seen the fixed monthly fee increase for an average in-city customer from $50 in 2011 to $76 in 2013. The board held off on those increases, he said, because there was a plan in place to pay off a $6 million bond, which it accomplished in 2015. By doing so, he said, the BPW was able to keep the cost of service down.
The rate increase set to begin in 2018 will ensure the utility has enough money for much-needed infrastructure improvements, Gordon said.
In the electric utility, the BPW will execute a revenue-neutral rate adjustment that will have little to no impact on customers’ bills. Officials will raise the fixed monthly ready-to-serve charge while decreasing the variable kilowatt hour rate, which will provide a more stable revenue stream when sales decline during certain times of the year.
For more information about the rate increases, call the BPW office at 302-645-6228.