Big water users wary of Midd rate hike
By JOHN FLOWERS
MIDDLEBURY — Agri-Mark/Cabot officials told Middlebury selectmen on Tuesday they will consider installing additional water recycling equipment at their Exchange Street cheese plant if the town increases its current water rate of $2.85 per 1,000 gallons used.
Representatives of Agri-Mark/Cabot and Middlebury College — two of the community’s biggest water users — were asked to weigh in on potential hikes to municipal water and sewer rates. Selectmen will have to consider raising rates in the near future or face significant shortfalls in the fiscal year 2010 water and sewer accounts. The shortfalls are arising from the fact that water/sewer use is declining as operating costs increase.
Town staff have estimated a $155,097 gap between projected fiscal year 2010 expenses ($1,002,468) and revenues ($847,371). Since almost $690,000 in water department expenses are controlled by a combination of wages, benefits, system improvements, electricity and fund transfers, selectmen are considering a rate increase. The current flat rate would have to be increased by 58 cents, from $2.85 to $3.43 per 1,000 gallons of use (a 20 percent increase) in order to plug the water fund shortfall, according to Middlebury Assistant Town Manager Joe Colangelo.
That kind of water increase would be tough for Agri-Mark/Cabot to swallow, according to Bernie Boudreau, manager of the company’s Middlebury cheese plant.
The Middlebury Agri-Mark/Cabot plant supplements its municipal water with an on-site well that yields 800,000 gallons per day. The company also has equipment that uses reverse-osmosis technology to recycle water from the whey created through the cheese making process.
“We can actually make this water drinkable, if we want to,” Boudreau said of the recycled product.
In 2002-2003, Agri-Mark/Cabot paid around $270,000 in annual water charges, Boudreau said. Since it began recycling water and drilled the new well, the company’s annual water bill has declined to around $133,000.
Boudreau estimated a rate increase to $3.43 per 1,000 gallons could bump Agri-Mark Cabot’s annual water bill by $41,500.
“That’s quite an increase,” Boudreau told selectmen. “That makes it even more challenging for us to pay for water.”
He explained the extra $41,500 could pay for infrastructure for additional water recycling facilities.
“That kind of makes the decision for me,” Boudreau said, noting the one-year payback for such a project.
CONCERNS AT COLLEGE
Middlebury College officials are also concerned about a potential hike in water rates. The college consumed a total of 1,216,187,307 gallons of water during the previous four quarters, according to town records. It should be noted that the college has several water accounts, not one, like Agri-Mark/Cabot.
The college has taken many measures in recent years to reduce its carbon footprint and conserve water. Measures have included making water conservation adjustments to cooling plants, chilling systems and boiler plants. The college has also installed water-reducing fixtures throughout the campus.
“As you are well aware, like everybody else, we are in severe cost cutting measures to, I guess I would term it, stay in business,” said Middlebury College Assistant Director of Facilities Services Michael Moser.
An increase in the water rate, Moser said, would likely force the college to further reduce water use and cut other expenditures outside of utilities.
In an effort to soften the toll of a rate increase on larger users, selectmen will consider adopting a new rate system.
With that in mind, Colangelo presented selectmen with a potential menu of new water charges that includes:
• Increasing the current flat rate to $3.43 per 1,000 gallons used. This would increase the burden for a family of four by around $28 per year, but would hit the highest users much harder. For example, businesses using 9 million gallons per year would see their annual bill rise $20,0000.
• A four-tiered structure that would asses a charge of $4.02 per 1,000 gallons for those who consume from zero to 99,999 gallons; $3.09 per 1,000 gallons to those who use 10,000 to 249,999 gallons; $2.92 per 1,000 gallons for those who consume between 250,000 and 499,999 gallons; and $2.74 per 1,000 for those who use in excess of 500,000 gallons.
This system would save the largest users in excess of $3,000 per year, but cost the minimum users another $18 per year.
• A two-tiered rate system that would charge $5.85 per 1,000 gallons to those who use between zero and 7,500 gallons; and $2.85 per 1,000 gallons for those who use more than 7,500 gallons.
This proposed system would increase the charge to all users by roughly $90 per year.
Colangelo noted that one-third of those currently hooked up to Middlebury’s water system pay the minimum charge. The minimum users now pay roughly 6 percent of the entire cost of the water system. The two-tiered system would allow the town to capture 13 percent of the water system cost from its minimum users.
Colangelo said the wastewater fund “does not have the large users that the water fund has,” and therefore provides less ability to capture new revenue.
Beset with relatively few large users and excess capacity, the sewer fund is facing a $308,182 shortfall. Colangelo said the selectboard could choose between several rate remedies, including:
• Raising the current flat rate from the current $5.94 per 1,000 gallons to $7.74 per 1,000 gallons. This would increase costs to the average family of four by around $72 per year, and boost costs to the largest users (more than 1 million gallons) by around $7,200 per year.
• Adopting a four-tiered structure that charge $10 per 1,000 gallons to those who use zero to 50,000 gallons annually; $8 per $1,000 gallons to those who use between 50,000 to 150,000 gallons; $6 per 1,000 gallons to those who use 150,000 to 300,000 gallons; and $4 per 1,000 gallons to those who use more than 300,000 gallons per year.
This new system would save the largest users an estimated $3,700 per year, while adding $121 to the annual bill of a family of four.
• A two-tiered structure that would assess a fee of $11.88 per 1,000 gallons for those who generate up to 7,500 gallons; and $5.94 per 1,000 gallons for those who generate in excess of 7,500 gallons.
This new system would increase annual costs to all users by around $180 annually, compared to the current rate.
Selectmen hope to strike a balance in how they apportion any new rate increase.
Some selectmen said the smallest users have enjoyed very reasonable water and sewer rates, while some struggling local businesses have had to absorb a greater proportion of the utility’s costs.
“I think water is a bargain for someone like my wife and I; we pay the minimum, we enjoy it and it’s good water,” Selectman Don Keeler said. “I have friends with wells outside Middlebury and believe me, their electricity costs them as much as I am paying for water. I think water is a bargain in Middlebury and I think we need to look at all these minimum users, including myself, and that is where the start of the burden should come. (Large users) are using the same infrastructure they are.”
Other selectmen argued against the notion of boosting minimum water/sewer fees on some area low- to middle-income residents who are already struggling in the tough economy.
“There are a lot of people in this town who would find it a stretch,” Selectman Bill Perkins said of a rate hike for minimum users. “There is something in my mind that says a big users like Agri-Mark or Middlebury College certainly can more easily afford a larger increase in their water and sewer costs than can the low-income folks in this town.”