By Josh Davis, Associate Editor
(March 14, 2019) To make up for shortfalls in Berlin water and sewer funds, rate increases should target high volume users, according to a new study by Salisbury architectural firm Davis, Bowen and Friedel.
In presenting the study to the Town Council Monday night, Rob Duma said the analysis took about a year to complete. He said Berlin had not adopted new rates in about five years.
Duma said annual connections in Berlin have been high, averaging 47 each year from 1999 until 2017. That figure was in the top third of neighboring communities, so no connection fee increases were recommended.
In analyzing water and sewer revenues and expenses, the study showed the water fund posted a loss in three of the last nine years and the wastewater account suffered a loss in six of the last nine years. Fund losses are covered by town reserves, also known as the general fund.
The town uses an “increasing block rate design method” for billing, which “helps to reduce the water usage by incentivizing users to use less water,” the study said. There is a flat rate for those who use less than 3,000 gallons per month, with increased rates for 3,000 to 6,000 gallons, 6,000 to 8,000 gallons, and more drastic increases for more than 8,000 gallons.
As the current structure does not have a large impact on a user until they consume more than 8,000 gallons per month, the study recommended a higher cost increase for those using 3,000 to 8,000 gallons.
Town Administrator Laura Allen noted 32 percent of Berlin users consume less than 3,000 gallons and would not be affected.
Additionally, the study cited $2.9 million in needed capital improvements for water systems, including $2.4 million for a 500,000-gallon elevated storage tank, and $775,000 in needed sewer capital improvements.
A proposed new rate structure would see increases phased in over a period of five years, with bumps during year one, year three and year five. In doing this, the reserve deficits created by borrowing for water and sewer overages would be repaid in 10-12 years, Allen said. Additionally, she said both funds would break even by year five.
In total, the study recommended a minimum 15 percent sewer rate increase and a 10 percent increase in water rates.
According to the study, “The town is able to achieve the necessary revenues by raising rates for high volume users. These new rates and the re-tiering will promote water conservation.”