After seeing no rate hikes in the current fiscal year, the Albemarle County Service Authority and the city of Charlottesville are now proposing increases for water and sewer service to keep up with rising wholesale rates and to pay for capital projects.
The Rivanna Water & Sewer Authority board last month approved a fiscal year 2022 increase in wholesale rates it charges the ACSA and the city for water from $2.095 to $2.346 per 1,000 gallons and for sewer from $2.369 to $2.517 per 1,000 gallons.
The ACSA and city also pay monthly debt service charges for water and sewer to the RWSA.
Overall, annual charges from Rivanna are proposed to increase 7.6% for the city and 14.3% for the ACSA.
The RWSA’s budget is about $38.9 million, 47% of which — or $18.4 million — is for debt service for capital projects, said service authority Executive Director Bill Mawyer.
For the median ACSA residential customer, using around 3,400 gallons per month, the advertised rates would be about a $2.87 increase in their monthly water and sewer bill, for a total of about $60.67 a month, according to the authority.
Five year ago, the median residential customer was using around 5,000 gallons per month, and their monthly water and sewer bill was projected to be about $78.16, according to authority documents for fiscal year 2017.
The ACSA board is scheduled to hold a public hearing on its proposed rate increases at 9 a.m. June 17 over Zoom. The ACSA serves homes and businesses in urban Albemarle, Crozet and Scottsville.
The service authority is projecting a slightly higher increase, at about 15.5%, in charges from Rivanna to the service authority in fiscal year 2022.
“We’ve estimated slightly higher flows charged to us, as well as a little bit more conservative percentage allocation based on the four-party agreement in our budget, so there is a slight difference in the percentage that they’re projecting and the percentage that we’re projecting,” said Quin Lunsford, ACSA finance director, at the service authority’s May board meeting.
ACSA will use funding reserves to help offset the wholesale increase, and the budget includes about $5.2 million from rate stabilization reserves to fund non-growth-related capital projects.
Lunsford said the service authority’s Capital Improvement Program has grown over time, and he doesn’t expect it to decrease during the next 10 years.
“I think the service authority really needs to evaluate some different funding opportunities, be it debt issuances, be it an evaluation of different rate structures, whatnot,” he said. “But for this budget, for the recovery of the community from the global pandemic, we think it’s appropriate at this point to propose to you that we use some of the reserves that we’ve accumulated over time for a situation like this to help mitigate the rate increase to our customers.”
The ACSA is seeing an increase in its budget for capital projects, including upgrades to water treatment plants, work at the Moores Creek Wastewater Treatment Plant and changes to the Beaver Creek Dam.
“They’re huge projects that are sort of out of sight, out of mind, but they’re essential to delivering water to our customers,” ACSA Executive Director Gary O’Connell said in an interview. “They’ve been put off for a long time, probably in reality too long, and they’re expensive, but that’s what’s driving the need for a rate increase.”
The ACSA continues to see water use go down per customer. The average residential customer 15 years ago used 4,500 gallons per month, O’Connell said, whereas now it’s about 3,200 gallons a month.
“If we didn’t have new customers and growth in the system, we would be going negative,” he said. “Part of the strategy for the future is, how much growth are we going to have that can help offset that decline and individual water conservation?”
O’Connell said that this fall the ACSA will do a new rate study and a long-term financial plan to help with future scenarios.
“I think we’re going to be looking at rate increases every year,” he said. “Hopefully, they’re around 5%, but they could be higher than that.”
According to the Charlottesville Department of Utilities, the average city customer using 400 cubic feet of water and wastewater per month, in a property with approximately 2,440 square feet of impervious surface and using 4,600 cubic feet of gas will see a total increase of $2.88 in their monthly water, sewer and gas bill.
“It’s really a two-year rate adjustment as opposed to just an annual one,” said Chris Cullinan, director of finance for the city. “That’s part of the reason why you see the numbers somewhat higher than they have been historically.”
The average customer will see a 7.76% increase in their water bill, or $2.15, and a 2.64% increase in their wastewater bill, or 98 cents. The stormwater rate will remain unchanged.
Cullinan said the rate increases are in response to the RWSA raising its wholesale rates.
“[RWSA] held their rates constant and they were able to use some of their cash reserves to help make that happen, but obviously that’s not sustainable in the long run, so [RWSA] is also passing along two years’ worth of cost increases to us and ACSA, as well,” Cullinan said.
Five years ago, according to city data, the average residential water customer was using about 430 cubic feet per month and the average residential gas customer was using about 4,880 cubic feet. The average city customer in fiscal year 2017 who received water, wastewater and natural gas service through the city was projected to have a bill of $111.36 per month.
The average city customer in fiscal year 2022 who received water, wastewater and natural gas service through the city is projected to have a bill of about $118.36 per month.
Cullinan said the Department of Utilities has a goal of providing the best service possible to customers, and that can result in increased rates.
“We don’t have a profit built in, I think that’s a popular misconception among the public — that we’re a for-profit utility. We actually set the rates so that we break even, or at least that’s the plan,” Cullinan said.
Lauren Hildebrand, director of utilities for the city, said that keeping the rates the same in fiscal year 2021 didn’t hurt the department’s ability to work on projects or make improvements.
“We continued to install water lines and rehabilitate sewer lines,” she said.
Hildebrand said the department saw some reduction in revenue, especially after the University of Virginia shut down in-person classes in 2020 due to the COVID-19 pandemic.
“UVa is the largest city customer, and they could not run some of their own services, or have people on Grounds,” she said. “We saw water usage decrease and the hotels weren’t occupied, so that has a direct impact on the revenue that we see.”
Hildebrand said the department is starting to see things getting back to normal from a revenue standpoint.
City and Albemarle natural gas customers will see their gas rates decrease by 0.49%, or around 25 cents monthly for the average customer. Cullinan said this is because of changes in natural gas supply.
“Natural gas is a commodity that’s traded on a daily basis and its prices are changing all the time,” he said. “What we’ve been seeing in the natural gas industry for the last couple of years now is that gas prices have been very stable and they’re actually declining a little bit.”
A public hearing on proposed city utility rates will be held at Monday’s City Council meeting, which begins at 6:30 p.m.