CHATHAM — The town is formulating an increase in the water rates, the first since 2005, as a means of paying for some long-awaited improvements to the water system. But the way the increase is structured has a second goal: to encourage better water conservation among the town’s biggest users.
On Monday, selectmen heard a report from Doug Gardner of Pioneer Consulting Group, who presented a new rate structure endorsed last year by the water and sewer advisory committee. The rate hike is needed to pay for repair and replacement of storage tanks, new water mains and other equipment and the design and construction of a supplemental water tank in FY22, Gardner said.
Currently, ratepayers for various meter sizes pay a per-unit charge on top of a minimum quarterly charge that ranges from $26.45 in the winter to $41.25 in the summer for the smallest users. But unlike many surrounding towns, Chatham includes the first 10 units of water, or 7,480 gallons, as part of that minimum charge. That system was put in place decades ago, when the cost of pumping, treating and distributing drinking water was much lower, Gardner said. Some customers also don’t use all of the water included in their minimum charge, but still must pay for it, he added.
The proposed rate structure features a lower quarterly service charge that applies whether or not the customer uses any water. Water use is then billed on a per-unit scale, with a lower rate for customers who use the least amount.
Under a discounted rate, residential users with a five-eighths-inch meter can expect to pay about $58.25 more each year if they use the minimal amount of water, while high-usage residential customers will pay around $95 more. Very high residential users, who consume nearly a half-million gallons of water in a year, would pay an additional $364.50.
Customers with larger meters, from one to four inches in size, would see larger increases on average. The very largest consumers, who have four-inch meters and can consume nearly five million gallons of water each year, would see their annual cost jump more than $5,700 to nearly $30,000. “And there are several of them,” he said.
“One of the goals of this study was to put conservation measures in place,” Gardner said. While it’s possible to encourage conservation using voluntary restrictions, as the town has done in recent years, “you can also enforce conservation through rates.” Specifically targeted are those who use town water for irrigation systems. While some of the town’s largest water customers are businesses, “you have a tremendous number of residential customers who use a tremendous amount of water,” Gardner said. “This puts a real premium on those who irrigate their lawn.”
The proposed rate structure continues the town’s practice of charging lower rates for water use in the winter.
“This seems to be working very well here in town,” Gardner said.
The town’s water operation is funded by a self-sustaining account similar to an enterprise fund. The need for capital improvements is what is driving the rate increases, Gardner said. He recommended establishing a budget line item for extraordinary and unforeseen expenses like water main breaks, which can wash away a road or damage property.
“The water infrastructure is a very fragile thing,” he said. By funding that line item and rolling over any unspent reserves from year to year, the town can have a buffer against such emergencies, Gardner said.
A public hearing on the rate increase will happen in March. If the board approves the change, it would take effect in fiscal 2020, showing up in bills after June 1.