Proposal adds two 4% jumps to water rates

Board votes in November, then LR, NLR have a say

— Central Arkansas Water officials proposed a rate increase for 2013 and another for 2014 as well as a 2013 budget that would increase by about $1.7 million.

The utility’s board of commissioners heard the rate and budget proposals for the first time at its meeting Thursday. Board members had few questions about the proposals and will vote next month on whether to approve them.

Chief Financial Officer Gary Pittman said 95 percent of the request for a budget increase would pay for debt service on bonds used this year to bring the utility’s two water-treatment plants into compliance with federal Environmental Protection Agency standards that will take effect at the end of next year.

The budget proposal would increase the utility’s operating budget from about $51.8 million to about $53.5 million.

“I don’t know how we make sure people understand this and get the word out, but we would not have to have a rate increase if it were not for the federal government mandating the upgrades,” said Eddie Powell, board treasurer and secretary.

The rate increase would raise the average homeowner’s rates by a little less than 4 percent in 2013 and an additional 4 percent in 2014. The rate proposal, which covers a three-year span, did not request an increase in 2015.

For a customer paying the minimum usage charge for 200 cubic feet of water or less, the rate would increase from $5.35 a month to $5.60 in 2013 and $5.85 in 2014.

For customers who live outside North Little Rock and Little Rock, that rate would rise from $7 to $7.33 in 2013 and $7.66 in 2014.

The average residential customer pays $12.15 a month currently, officials said. Those ratepayers would see a jump of 47 cents to $12.62 starting in March if the rate is approved, and another 48-cent jump in January 2014 to $13.10 a month.

Graham Rich, the utility’s chief executive officer, said at the meeting that the average Little Rock water customer paid $8.04 per month in 1985. And the average North Little Rock user paid $10.32.

“That’s not a great increase over almost a 30-year period,” he said.

The increase would pay down debt from about $18 million the utility borrowed for upgrades and capital improvements.

The majority of the upgrades were made to come into compliance with the EPA’s Stage 2 Disinfectants and Disinfection Byproducts regulations, which will take effect at the end of 2013.

The utility also switched from using chlorine gas to using sodium hypochlorite, a liquid bleachlike substance that is less dangerous than the potentially toxic gas. And maintenance workers are installing surge tanks, at a cost of about $3 million, on the raw-water transmission mains from Lake Maumelle into North Little Rock.

Central Arkansas Water serves about 400,000 residential and commercial users in central Arkansas, including all of Little Rock and North Little Rock.

Pittman said average commercial users — excluding hospitals, bottling plants and other large volume operations — would pay an average of $2.48 more a month under the two rate increases. And customers with sprinkler meters would pay an average of $1.65 more a month on those accounts.

Water bills in Little Rock and North Little Rock are bundled with sewer and solid waste — garbage and recycling — bills, meaning residents in both cities will see the blue-and-white bundled bill steadily increase over the next four years because of increases on the other city utilities and services also approved this year.

Little Rock and North Little Rock approved multiyear sewer-utility rate increases this year.

Little Rock’s sewer rates for residential customers increased by about 5 percent this year and are scheduled to increase 4.5 percent in 2013, 2.5 percent in 2014 and 4.75 percent in 2016.

The overall sewer rates for residential, commercial and industrial customers increased an average of 12.75 percent this year and the average for coming rate increases will be 8 percent in 2013, 7 percent in 2014 and overall 4.75 percent in 2016.

North Little Rock’s overall sewer rate increased 12 percent in April and is to increase another 11 percent in 2013 and 9.5 percent in 2014.

North Little Rock also approved a 56-cents-per-month fee for the new areawide recycling program that went into effect in April. The Little Rock Board of Directors voted to absorb the additional cost of about $550,000 into the operational budget, but city officials said they would reconsider passing that cost on to customers for the coming year.

Overall, Pittman said that because of increased water use and the drought, the utility’s operating revenue for 2012 so far is about $4.6 million above projections for the year. He also said operating expenses are about $400,000 below budget to date.

“We are at a point now where we have to do this and we have to move forward,” said board member Roby Robertson. “This increase is not designed to create a lot of little extra things from the utility. I’m proud of this budget and proud of this staff. There are many departments that have reduced their budgets and made it so we are asking for realistically a very modest increase.”

The utility board will vote next month on the budget and rate increase proposal and then the rate proposals will be presented to the North Little Rock City Council and the Little Rock Board of Directors. Both boards will then have 90 days to voice any opposition to the plan.

Arkansas, Pages 9 on 10/12/2012

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