Water, sewer rates could rise

Courtesy Photo A breakdown of current water-sewer rates and proposed changes.

ALPENA — City of Alpena water and sewer customers may see a slight increase in their water bills this summer, as the Alpena Municipal Council is considering a combined 2.96% increase on rates per 1,000 gallons of water and sewer.

The increase would push water and sewer rates from a combined $12.15 per 1,000 gallons to $12.51 per 1,000 gallons. If approved by the council, the rate increase would begin on July 1, when the city’s new fiscal year begins.

There would also be a 2.25% increase on the billing charge, which matches the contractual increase from the city’s utility manager, Suez.

The rate hike would also apply to the Charter Township of Alpena, which buys city water and sewer services for many of its residents.

The city and township are in litigation over rate increases implemented five years ago. City officials do not expect the township to pay the increase. The township is still paying rates established in 2011.

City Engineer Rich Sullenger said the city estimates system costs based on the past, current, and projected fiscal years and adjusts fees accordingly. That methodology is utilized to minimize rate swings.

Sullenger said that, if all customers paid the same rate, the new rates would generate about $3.5 million in new revenue that could be used to complete capital improvement projects. He said that, if the township continues to pay what it has, only $2.3 million would be captured, which is short of the $3.3 million needed for proposed projects.

The total amount of money needed to operate and maintain the system is expected to be $8.8 million for fiscal year 2019-20, but Sullenger said that amount will not be met, even with the proposed rate increase.

“Neither of these funding levels are being met with the current revenue available,” Sullenger said. “This disparity between needs and available funding was known and anticipated and thus the slow-yet-steady rate increase is utilized towards achieving the needed funding.”

Sullenger said there will be no increase to the Ready to Serve Charge and, because of an increase in the volumes billed for, the cost per 1,000 gallons actually decreased, but that drop was offset by additional infrastructure maintenance funding needs.

The litigation with the township is currently in the hands of the Michigan Court of Appeals. The township has a large portion of what it owes the city for past-due balances in a joint escrow account. That account had about $3.6 million in the escrow account as of Feb. 28.