The Chesterton Utility Service Board has formally endorsed a sanitary sewer rate hike for Chesterton rate-payers of not quite 6 percent.

At its meeting Monday night, members voted 5-0 to recommended that increase to the Town Council for action.

Under that hike, the average residential household using 10,000 gallons of water per month would see its bimonthly bill rise from $76.80 to $81.26: a hike of $4.46 or $2.23 per month or 5.81 percent.

If the Town Council approves the proposed increase, it would go into effect on Jan. 1, 2013.

The rate hike is needed for a single reason, the Utility’s contracted financial advisor, Ted Sommer of London Witte Group, told the Chesterton Tribune today: to pay for the long term control plan mandated by the U.S. Environmental Protection Agency—and overseen by the Indiana Department of Environmental Management—under which the Utility is building a 1.2-million gallon storage tank to hold stormwater in the system during heavy rain events. The estimated cost of that tank and associated upgrades to the wastewater treatment plant: $14.9 million.

The Service Board is currently seeking to finance that project through a loan from the State Revolving Fund.

Although the Service Board is also considering a separate $3.1 million bond issue later this year—to finance a number projects at the wastewater treatment plant as well as some collection work deferred from the 2009 bond issue—neither the proposed 2012 bond issue nor inflationary pressure on operations is, in and of itself, sufficient to necessitate the 5.81 percent rate hike, Sommer said.

That’s largely because the Utility’s finances are strong, Sommer said. “I’ve seen a lot of utilities. This appears to be a well-run utility.”

Or as President Larry Brandt told the Tribune, the 14-percent rate hike in 2009 allowed the Utility not only to float a $2.166-million bond for capital improvements but also to build a strong cash position. That means that a number of vital projects and acquisitions have been paid for, or will be paid for, in cash: a $700,000 digester project, a $750,000 re-lining project.

Yet Sommer noted this as well: by “wrapping the debt” associated with the long term control plan—that is, by back-loading the larger payments to later years, when other bonds are due to retire—the Utility will be able to “levelize” the burden. “This is what makes it affordable,” he said, “asking future generations to pay their share.”

Had the Utility opted simply to tack the long term control debt onto current rates, Brandt estimated, the hike which Chesterton rate-payers are facing would be closer to 44 percent, not the 6-percent increase right now on the table.

Outside customers of the Utility—the Town of Porter and the Indian Boundary Conservancy District—will also see their rate increase: by 16 percent, Brandt said, exactly the same percentage hike which would be assessed to Chesterton rate-payers for the treatment portion of their bill. When all components of the Chesterton rate-payers’ bill are calculated, however, the overall hike would be around 6 percent.

“What the Town of Chesterton bills the Town of Porter is for treatment only and that would go up 16 percent,” Brandt said.

The most recent sanitary sewer rate hike—for Chesterton households only—went into effect on April 1, 2011: one of 2 percent, enacted to offset the costs of maintaining the Town of Chesterton’s collection system. The Town of Porter and the Indian Boundary Conservancy District saw no increase.

Two years before that, on Jan. 1, 2009, the 14-percent rate hike went into effect, to support the 2009 bond issue. It also had the effect of improving the Utility’s cash position.

In other business, members voted 5-0 to schedule a public hearing at 6 p.m. Monday, Oct. 29, on the preliminary engineering report for the long term control plan. That public hearing is a requirement of securing financing from the State Revolving Fund.

Meanwhile, Service Board Secretary Donna Simmers announced that she would be resigning her position effective Nov. 30, after nearly 13 years on the job.

“Thank you for your years of service,” Brandt said. “We’ve always appreciated your efficiency and excellence.”

“We’re going to miss you,” Member Andy Michel added. “You’ve done a lot of things over the years that we’ve appreciated. We’re going to miss you.”

In September, Chesterton used 37.53 percent of its 3,688,000 gallon per day (gpd) allotment at the wastewater treatment plant; Porter, 43.61 percent of its 851,000 gpd allotment; the Indian Boundary Conservancy District, 52.30 percent of its 81,000 gpd allotment; and the plant as a whole, 39.22 percent of its capacity.

There were no combined sewage overflows last month.

Also in September, the Utility ran a surplus of $184,730.77 and in the year to date is running a surplus of $97,410.30.

At the Stormwater Management Board’s meeting earlier Monday evening, Stormwater Utility Superintendent Mark O’Dell reported that the Stormwater Utility ran a deficit in September of $15,158 and in the year to date is running a surplus of $4,628.

Posted 10/17/2012