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Rehoboth’s utility rate group proposes rate plan

Suggestions include consumption based method, with ready-to-serve fee
June 28, 2019

Story Location:
Rehoboth City Hall
229 Rehoboth Avenue
Rehoboth Beach  Delaware  19971
United States

Use less, pay less. Use more, pay more.

That is the message that underlies a plan presented to the public by a group formed to study water and wastewater rates in Rehoboth Beach. 

During a special commissioner meeting June 27, the utility-rate working group recommended paying for millions of dollars in loans and capital improvements by using a consumption-based and ready-to-serve fee approach. The plan does away with current rates based on meter size and peak versus nonpeak water-usage rate.

Rehoboth Public Works Director Kevin Williams said the group, which has met for months, was tasked with developing a rate structure that was fair and equitable and did not protect any particular user group.

“It’s been in the back of our minds since day one,” said Williams.

Rehoboth is examining the city’s utility rate structure because it has loans to pay off and also faces expensive system upgrades. According to a report conducted by Massachusetts-based The Abrahams Group, in addition to the $42 million spent on the recently completed ocean outfall, city engineering consultant GHD has recommended roughly $4.8 million in improvements to the city’s water system and roughly $12.4 million more in improvements to the city’s wastewater system through fiscal year 2023.

Under the group’s proposal, for every 1,000 gallons used, the city would charge $14.70 for wastewater and $6.30 for water.

The group also proposes a ready-to-serve fee for the two utilities that is unrelated to usage. Those served by a 1-inch meter would be charged about $125 annually for wastewater and about $42 annually for water. For those with 2-inch meter, annual  fees would rise to $452 for wastewater and about $154 for water. The ready-to-serve fees increase for 3-inch, 4-inch and 6-inch meters, but total revenue collected by the city decreases because there are very few meters of more than 2 inches. 

Williams said the proposed rates would collect a little more than needed up front, so that when costs spike in years five through eight, the bills don't spike as much.

According to a table prepared by Williams, if the group’s proposals were implemented, Rehoboth’s rates for 1-inch meters, through the first four-year cycle, would remain on the lower end when compared to comparable municipalities. A household in Rehoboth that uses 20,000 gallons a year would pay just over $418 a year for wastewater and $168 a year for water. In Lewes, that same user would pay $876 annually for wastewater and $278 annually for water. A similar household on Tidewater Utilities Inc. would pay $588 for water.

Committee member Roger Truitt said it’s important to remember proposed rates, needed to pay for critical upgrades, affect all the users on the system, not only city residents. He said nonresident users will pay for roughly 69 percent of the costs, as they do now.

A number of citizens questioned the group’s methodology and abolishing peak and nonpeak rates. Committee member Michael Strange said the groups assessment and recommendations provide a base level for discussion, and it’s up to the commissioners to decide what they value most moving forward.

A town hall meeting to discuss the group’s proposal has been scheduled at 10 a.m., Saturday, July 13.