Harford water and sewer rate increases planned, as operating deficits persist - Baltimore Sun

Saying the county's water and sewer operations need to stem a tide of annual losses, Harford County Executive Barry Glassman is proposing a wholesale increase in user rates, the first such increase in nearly 20 years.

Legislation to set the higher rates was introduced to the Harford County Council at its legislative session Tuesday evening. The increase would go into effect in January, with customers feeling the full impact on their April 2016 quarterly billing, administration spokesperson Cindy Mumby said.

The bill would increase the quarterly base water charge for customers with a standard residential 5/8-inch meter, from $6.04 to $9.02, but would significantly lower the base charge for all meters larger than that, mostly commercial, industrial and institutional customers.

For 2017 through 2019, quarterly base water charges would rise for customers with 5/8-inch and 3/4-inch meters but would steadily drop for owners of all larger meters.

The base sewer charge would rise from $5.61 to $7.60 for a 5/8-inch water meter, while the base charge for a 12-inch meter, for example, would decrease from $5,220.09 to $4,903.84. The residential flat rate charge would rise from $60.29 to $77.46.

The base charge for a 5/8-inch meter would keep increasing, to $12.68 by 2019, while charges for other meters would decrease.

The quarterly water usage rate, meanwhile, would increase from a universal $2.43 per 1,000 gallons to $3.45. The excess water usage rate would go up from $3.04 per 1,000 gallons to $4.31.

The water usage rate would rise to $3.82 from Jan. 1, 2017 to June 30, 2017; $4.44 from July 1, 2017, to June 30, 2018; $4.45 from July 1, 2018 to June 30, 2019; and $4.73 starting July 1, 2019.

Quarterly sewer usage rates would also increase, from $3.09 to $4.99 per 1,000 gallons in 2016, $5.42 Jan. 1, 2017, through June 30, 2017, $6.77 July 1, 2017 through June 30, 2018, $6.79 July 1, 2018 through June 30, 2019 and $7.22 starting July 1, 2019. Sewer usage is calculated based on water consumption.

New surcharge

The legislation also creates a water and sewer asset reinvestment charge, a quarterly surcharge that would be paid by all customers, including wholesale buyers and governmental customers buying under contract, for water each connection based on the size of the largest water meter installed.

The surcharge, which would range from $3.89 to $486.25 for water and for sewer, will be used to fund facilities, equipment and infrastructure.

According to the legislation, the proposed changes replace a "complex and cumbersome" rate structure that does not "adequately support water and sewer functions" with a "simplified rate structure" that will be "phased in over time."

The county-run system has 44,139 customer accounts, according to Mumby. They include owner occupied homes, residential rentals, commercial and industrial facilities, institutional facilities, such as public and private schools and the county's two hospitals, and municipal customers. The municipal customers include the City of Aberdeen, which buys water from the county, and the Town of Bel Air, which has its sewage treated by the county. Only about 4 percent of the total accounts are commercial.

The county also sells water to Maryland American Water, a private company that operates the Town of Bel Air water system and also serves areas of Forest Hill and Fallston. Any increases to bulk municipal water and sewers are likely to be passed on to their customers.

Harford has about 250,000 residents and 90,700 households, according to the most recent U.S. Census estimate released this summer.

Although a substantial number of homes are served by either county, public or private water and sewer systems, thousands of homes in the western and northern portions of the county still rely on private wells and septic systems and would not directly be affected by any proposed water and sewer rate increases. The number of non-public service residential customers was not immediately available Tuesday.

Most residential accounts have a current base quarterly charge of $6.56 for water and $6.10 for sewer, Mumby said. They also pay a quarterly usage charge of $2.64 per 1,000 gallons of water and $3.36 per 1,000 gallons of sewage treated, with the latter charge based on their water usage.

Although base rates are higher, depending on the size of the water meter for non-residential customers, Mumby said the usage rate is fairly constant regardless of meter size, although there is a surcharge for the largest consumers, who use more than 380,000 gallons a quarter.

Annual adjustments inadequate

Base user rates were last set in 1995, Mumby said. At the same time, the county instituted an annual increase in the rates tied to the Consumer Price Index, but those increases haven't been adequate to meet the costs associated with running the system, she said.

The CPI increases have averaged about 2 percent over the same six-year period, according to Mumby, who noted that in one year, 2009, CPI was actually a negative, and the rates were adjusted downward in Fiscal 2011, as a result.

"Those increases [tied to CPI] have not been consistent to meet costs, not just ours but others [counties]," she added.

Some County Council members already were briefed by Glassman on the financial problems with the system prior to Tuesday's introduction of the rate increase legislation, Mumby said. The proposed changes are based in part on a rate study commissioned by the previous council, Mumby said.

Council President Richard Slutzky said Tuesday afternoon he did not want to comment on the rate increase legislation until after it was introduced. The council will hold a public hearing on the legislation on Oct. 13 at 6:30 p.m. in the council chamber in Bel Air.

Councilmen Patrick Vincenti and Curtis Beulah declined to comment following the council meeting, both saying they wanted to give the administration a chance to make its case to the public.

Councilman Joe Woods, who represents the Fallston and Abingdon areas, said Tuesday afternoon he had not seen the legislation but added that Harford County has "the lowest rate around" for water and sewer use. Woods also said the CPI increases have not kept up with the changes in funding needed to operate the system.

According to figures provided by Mumby, the county water and sewer operations have posted average losses of about $14 million annually since the 2010 fiscal year, ranging from a high of almost $19.3 million is Fiscal 2013 to a low of almost $10.4 million in Fiscal 2011.

The unaudited loss was $15.7 million for the most recent full fiscal year, 2015, which ended June 30. It cost approximately $44.3 million to operate the system in FY 2015, a figure than includes $11.4 million in depreciation of the facilities. Total revenue was just $28.6 million.

Mumby said the system had built an operating reserve, or fund balance, in earlier years that was used to offset annual losses to date.

Under county law, the water and sewer system is accounted for as a separate enterprise fund, one that must break even or run at a surplus from the revenue taken in the rates charged users. The fund is not supplemented by general tax revenue, and the County Council is essentially the rate-making body.

"The operating fund reserve essentially has been depleted over the past decade and this is the tipping point," Mumby said.

Additional annual losses, she added, would have an "exponential" negative impact on the water and sewer fund balance.

Copyright 2015, The Baltimore Sun

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