Water rate/billing changes this summer

The Select Board approved increases and revised tier categories for water rates in time for the summer that will be reflected in bills received this fall.

Above: A look at the impact of rate changes on some sample users of Town Water – based on quarterly billing. (image cropped from Select Board meeting packet)

This month, Selectmen approved updated water rates for Southborough users. The rates won’t be reflected in the next bill (due on August 1st), which will be based on meter readings taken on June 1st. The increased cost of water beginning on June 1st will show up on bills due this fall. *

Obviously, the bad news is rates going up at all. The good news is that while the percentage increases are high, for lower end and even average users, the dollar increase is relatively low. The higher impact will be felt by the biggest consumers.

In their April 24th meeting, the board heard from consultant Matt Abrahams who conducted an updated study of the Town’s Water Fund finances. He explained that the Water Reserve Fund would soon be below the recommended “Retained Earnings” level to provide a buffer for future capital expenses. Below are his Retained Earnings projections if the billing remained at the same rates or with the adjusted rates. (These were the adjusted versions presented in May based on updated information about capital costs and a revised rate recommendation.):

Water Fund Retained Earnings if rates aren't updated Water Fund Retained Earnings Projections with Rate Changes

The board looked at multiple options for revised billing. Abrahams recommended a version that revised the tier method to better encourage conservation rather than simply increasing rates. Resident John Butler zoomed in to advocate against adopting the recommended rates. He believed they placed too high a burden on the lowest use customers. The board asked Abrahams to propose alternative options that would charge less to the lowest tier, shifting more of the rate increases towards the high usage customers that put a bigger strain on the Town’s infrastructure. At the May 2nd meeting, the Board adopted an alternative option that they were satisfied did that.

The details below are based on quarterly bills (which all bills will be going forward.)

Currently, customers aren’t charged for the first 0-750 cubic feet of water based on the amount used. Instead that tier is where the “Base Charge” is applied for being a customer on the system. (That fee is based on the meter pipe size and whether the customer is residential or commercial. A discount is applied to that for qualified seniors.) If more water is used, the Tier 2 rate is applied to the next 751-3,000 cu ft of water used. Higher rates are added for any additional usage (Tier 3 for up to 10,000 cu ft and Tier 4 for beyond that).

Under the revised billing, the (increased) Base Charge is pulled out of Tier 1 and applied separately. Then the first 0-1,000 cu ft is charged based on the amount used. (The rate will be $2 per 1,000 cu ft, which is equivalent to 1/5¢ per cubic foot.) The upper tiers have increased rates, and the highest tiers now have lower thresholds to trigger them. Going forward, the new rates would be increased 3% each year under the recommended plan. (That would still be voted on annually.)

Cropping images from the presentation, I’ve added a comparison of the current and future quarterly billing fees below. I also added my own calculations based on the data shared for typical/sample users. For example, a senior with a standard meter who only uses 500 cu ft of water per quarter would see a close to 40% increase to their bills over the next year. But, that only amounts to an additional $43.48 for a full year (or less than $11 per bill). Residents who use 6,000 cu ft per quarter could see an increased cost of $220 the first year. Businesses who use a lot of water could see an over $2k increase.

Water Bill rate comparison Water Rate change impact chart

During the discussion, the board learned that about 50 customers have been receiving monthly bills. When the rate system was last revised, those tiers were accidentally duplicated in the monthly bills. That means that higher end users were billed at a lower tier rate than they should have been. Water Fund consultant Matt Abrahams noted that on the flip side, each monthly bill charged the same base fee as a quarterly bill.

For simplicity, the board voted that monthly customers be notified that they will be billed quarterly when the new rates go into effect.

To read more about the Town’s water infrastructure costs and the analysis done, click here for materials from the Select Board packet.

The Town will be sending out information about the rate changes. Right now the website lists the current rates, but I expect that to be updated and posted here where you can also find the application for the senior discount.

*The board actually voted to have the rate change take effect on July 1st which would be in the middle of a billing period. (At the time, they misunderstood the billing period timeframe.) I reached out to Chair Kathy Cook, noting that meters are actually read on June 1st and September 1st. She responded that Treasurer Brian Ballantine had already flagged the error. Public Works will be sending out information with the correct date and she plans to have the board correct the decision at their May 23rd meeting.

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