Water and sewer rates will increase in Maumelle starting Tuesday, with residents to first see the higher costs on October water bills for September's usage.
There is a chance the increases won't last or will change, however.
Because of a lawsuit challenging the Maumelle City Council's procedures to approve the increases, the difference between the old and new rates will be placed in escrow by Maumelle Water Management until a decision is made in Pulaski County Circuit Court. If the increases are ruled illegal, customers will receive a refund.
Also potentially affecting the rate increases is the possible acquisition of Maumelle Water Management by Central Arkansas Water, the water provider for mainly Little Rock and North Little Rock. Central Arkansas Water is scheduled to complete a feasibility study by late September for the possible acquisition. How such a takeover would affect Maumelle water rates, or when that might happen, won't be known until the study is finished.
"Hopefully, we'll have the Central Arkansas Water proposal before our next meeting," said Barry Heller, Maumelle Water Management's general manager, referring to the utility's board of commissioners, which next meets Sept. 8. "But I don't know that for sure."
The Maumelle utility and the City Council approved the rate increase this summer of 9 percent for water and sewer rates, a 15 percent increase for sprinkler meter usage, and a 5 percent increase in debt service fees applied to water and sprinkler meters. All charges are included on monthly water bills.
With more than 10,000 metered customers, about 7,200 of which are residential, the rate increase is projected to increase utility revenue by $600,000 over the next year, according to utility figures.
The lawsuit challenging the rate increases was filed Aug. 13 in the county's Circuit Court by resident Michael O'Leary, represented by the Ritter Law Firm in Maumelle. The lawsuit asks the court to bar implementation of the increases and alleges that the City Council violated its own procedures by not properly setting public hearings because the amount of the increases changed from what was first advertised.
"If for some reason the rate increase is nullified, or rescinded, then we will refund the excess back to the customers," Heller said last week. "I don't really foresee that happening, but I guess anything is possible."
The approved increases were a change -- made because of the Central Arkansas Water proposal -- from an earlier plan that would have raised bills by an average of $25 by the end of the next three years. The proposal put a hold on Maumelle Water Management's pursuit of increases over any term longer than one year.
The current rate increases are mainly to get Maumelle Water Management back into compliance with its bond covenants and on steadier financial footing overall for the short term, Heller said. The original increase would have included funding to build the utility's reserves and complete capital improvement projects.
Bond agreements require that the utility's revenue equal at least 1.2 percent of its debt services, but that figure dropped below 1 percent in December, Heller has said. But the rate increases aren't a cure-all for a steady annual decrease in the utility's revenue, Heller said. Water demand decreased by 21 percent two years ago and by another 13 percent last year, according to utility figures. Operating expenses, however, have risen an average 6.5 percent annually since 2007.
"The rate increase puts us back into compliance with our bond covenants, but doesn't immediately do it," Heller said. "It will take a month or two to get us back over the debt-service requirement. In essence, that's about all it [the increase] does.
"It should give us some additional revenue, so we can do some of the things we need to do, but other than that, it's not going to do much," he said.
The revenue drop, Heller explained, is largely because of a drop in water usage by more conservation-conscious customers and more efficient household appliances.
"Usage continues to go down and also our costs continue to increase," Heller said. "So that's how we went out of compliance."
The higher rate-increase proposal drew complaints from many Maumelle residents, some of whom say Maumelle's system of wells doesn't produce drinking water as pure as Central Arkansas Water's supply from lakes Maumelle and Winona. Public hearings on the rate increases attracted crowds of opponents, but things have settled since, Mayor Mike Watson said.
"Since the [council] vote was taken, I have really not heard anything," Watson said. "The most questions I get are what about the Central Arkansas Water merger. That will be the next big topic then, what goes forward with that. That's the question I get mostly now, as opposed to ones about the rate increase."
Customers with lawn sprinklers face a bigger increase than others, Heller said, because sprinklers are considered "an optional water use." Also, the higher rate is an attempt to discourage sprinkler use that can drain the water supply during summer droughts.
"We figure that [sprinkler] usage should pay more than the poor old lady on a fixed income," Heller said. "It's also designed to try to limit our peak water usage from when they're just pouring water on the ground. Hopefully, that will also keep us from having to expand the size of our water plants in the future."
Metro on 08/30/2015