Chesterton Tribune

 

 

Hearing set April 22 on sewer rate hikes

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By KEVIN NEVERS

The public will have the opportunity to comment on a proposed schedule of sewer rate hikes at the Chesterton Town Council’s next meeting, at 7 p.m. Monday, April 22, at the town hall.

Members voted unanimously at their meeting Monday night to set the public hearing, at the request of Utility Service Board President Larry Brandt.

Brandt characterized the rate hikes--which would impact different categories of customers differently--as “small increases”:

--A 3.01-percent rate hike for the average Chesterton residential customer using 10,000 gallons per month, increasing the bimonthly bill from $85.84 to 88.42.

--A 5.22-percent hike for the Town of Porter. Based on average usage, Porter’s monthly payment to the Utility would increase from $56,598.10 to $59,552.34.

--A 5.21-percent hike for the Indian Boundary Conservancy District (IBCD). Based on average usage, the IBCD’s monthly payment to the Utility would increase from $6,523.94 to $6,863.98.

--A 0.66-percent hike for Fox Chase Farms residents, increasing the monthly payment to the Utility from $98.53 to $99.18.

Brandt cited a variety of reasons for the rate hikes, beginning with the $152,000 annual Payment in Lieu of Taxes (PILT) which the Utility is making over to the Town of Chesterton’s General Fund in support of the wage increases granted last year by the Town Council to municipal employees. Porter, IBCD, and Fox Chase Farms would not be on the hook for the PILT; only Chesterton residents would be paying for it.

Brandt also cited general inflationary pressure, including a 2.88-percent increase in such operating expenses as wages, benefits, and pensions, as well as purchased power from NIPSCO; the necessity of increasing the Utility’s budget for vehicle replacement; and a requirement under the Utility’s agreement with the State Revolving Fund--which provided financing for the 1.2-million gallon storage tank to reduce combined sewer bypasses during heavy rain events--to generate net operating revenues equal to at least 125 of its annual maximum debt service.

“We’re well above average in our ability to manage the Utility from a financial point of view,” Brandt said. “But we must keep $1.2 million in cash in reserve to cover one year’s debt.”

“Small” though these increases may be, however, Brandt did make a projection about the next biennial rate study, set to be conducted in 2021, at which time a re-allocation of debt is scheduled to take effect. Under that re-allocation, service on debt incurred by improvements to the collection system--which is located almost entirely in the Town of Chesterton and serves chiefly Chesterton properties--will be replaced by service on debt incurred by improvements to the wastewater treatment plant itself. All categories of customers--including the Town of Porter and IBCD--will be on the hook for the latter, Brandt said.

Brass tacks: if “nothing else changes” over the next two years, the Town of Porter and IBCD could see their rates increase by some 11 percent, Brandt predicted.

Is there any way “to soften that increase, in a stair-step fashion?” asked Member Emerson DeLaney, R-5th.

Phasing in rate increases has proved historically to be bad policy, Brandt replied. The Utility Service Board has done so in the past and “learned the hard way” that phased rate increases result in revenue losses and a depletion of cash on hand. By way of example, the Utility is currently awaiting delivery of a new $200,000 camera truck, an essential piece of apparatus, to replace the 30-year-old model. The Utility will pay for that new vehicle with cash on hand.

Of the scheduled debt re-allocation, Member Jim Ton, R-1st, observed, “It may not look like it, but it is an evening out.”

Brandt did ask the council--should it approve the proposed schedule of rate hikes--to make them retroactive to April 20, two days before the public hearing, because that day coincides with the billing cycle.

Associate Town Attorney Julie Paulson said that she would have to review the legality of doing so.

The last rate hike approved by the council took effect on Jan. 1, 2017. That hike increased the average Chesterton household’s bimonthly bill by 5.64 percent: from $81.26 to $85.84.

 

Posted 4/10/2019

 

 
 
 
 

 

 

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