Weatherford Democrat

Aledo ExtrA

March 5, 2013

Aledo City Council declines to lower utility rates

By JUDY SHERIDAN

Aledo City Council members took no action to decrease water and sewer rates Thursday, lining up with recommendations from rate consultant Chris Ekrut, of Stowe & Company, and City Administrator Ken Pfeifer.

“I want to emphasize that this is a one-time shot depending on growth,” Ekrut cautioned before the vote, after giving a presentation that showed how using $100,000 or $150,000 from reserves would buy down the rates for utility customers.

“If the growth does not happen to make up for the monies that you’re not taking from customers, you could give a rate decrease this year and then turn right around and have a rate increase. For a customer that’s not very educated on the issues, that could be very confusing for them.”

Pfeifer suggested the council look at a rate decrease in the fall instead, following the regular annual rate study.

“My recommendation is to wait on this,” he said. “We have done very well on revenues as it relates to both residential and commercial, but I think it’s a good recommendation to be a little bit cautious, given we’re entering a new period in terms of our water and sewer fund.

“With a switch to surface water, there’s going to be some repairs to some of our older tanks, and we want to make sure we have all the costs gauged here.”

Ekrut projected that using $100,000 from reserves would allow a 5.4 percent rate decrease, reducing the annual bill for the average water customer by $25. Adding $150,000 in reserves instead would allow an 8 percent decrease, he said, reducing the annual water bill by about $37.

For the average sewer customer, the yearly savings came to $27 for the lesser amount, $41 if the city added $150,000.

The combined savings for average customers of both water and sewer came to $52 or $78 per year, depending on the amount of reserves.

In response to a question from Mayor Pro Tem Bill McLeRoy, Ekrut said his projections were not adjusted to consider the effect of new water and sewer connections coming online.

The recent rate study stemmed from a request that the council made in the fall, when members voted to kick in $150,000 in reserves rather than implement a 7.97 percent rate increase recommended by Ekrut.

At that time, the council directed Pfeifer to look into the possibility of decreasing rates once the annual audit was completed.

The city has increased utility rates by 19.77 percent in 2009, 10.71 percent in 2010, 15.68 percent in 2011 and 4.02 percent in 2012.

The audit, presented to the council Thursday night, showed the water and sewer fund in a strong financial position, with reserves adequate for 7.8 months of operations, slightly less than last year.

It also showed the city’s general fund with reserves enough for 19.8 months of operations, compared to 9 months for most cities, according to auditor Mike Vail of Vail & Knauth, LLP.

Ekrut said the city’s water and sewer fund is doing better than expected due to the delay in purchasing water from Fort Worth.

“In our first rate study in 2009, we projected that a 124 increase in revenue would be needed between 2009 and 2013, but it is actually a 70 percent increase,” he said. “Why? We’re not paying for Fort Worth water yet.

“The second reason is operations and maintenance, which also includes Fort Worth water. We predicted O & M would increase by $348,000 in 2013, but it has actually increased by $34,000.”

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