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Water rates headed up

Central Arkansas Water’s Board of Commissioners is planning two rate increases which will total 7.48 percent by 2014 to cover increasing costs. Details of the need for the increase were provided Monday to the North Little Rock City Council.

The plan also was discussed when CAW commissions held a public hearing on Dec. 4, also known as the water board’s Resolution 2012-07, which approved a rate schedule for water customers from 2013-15. The CAW commissioners approved the resolution on Nov. 8.

On Nov. 13, CAW provided the different cities – such as North Little Rock and Sherwood — where it provides water service of the impending rate increase. On Monday, CAW presented the plan to the North Little Rock Council and the same plan is to be presented to the Little Rock Board of Directors.

The new rates are to become effective on March 1, 2013. In 2012, the average monthly residential bill has been $12.15. That rate will increase to $12.62 in 2013 and to $13.10 in 2014. Currently, the minimum monthly bill has been $5.35 in 2012 but will raise to $5.60 in 2013 and to $5.85 in 2014.

CAW customers are to see a 3.82 percent increase in 2013 and 3.66 percent increase in 2014. CAW customers saw no rate increase in 2012 and should not see another one in 2015, according to a Power Point presentation presented at the utility’s Dec. 4 meeting in addition to the North Little Rock City Council Monday.

CAW hired Raftelis Financial Consulting (RFC), which provides services that help utilities function as sustainable organizations while providing the public with clean water at an affordable price. RFC has offices in six cities across the United States, including Kansas City, Mo.; and Austin, Texas.

RFC filed a report in August 2011 and no 2012 rate increase was recommended.

One of the factors affecting the rate increase was the fact that CAW’s debt service is expected to increase by 30 percent in 2013 to $7.9 million. Its operating expenses are expected to increase 0.5 percent in 2013 to $37.17 million; by 4.5 percent in 2014 to $38.84 million; and by another 2.5 percent in 2015 to $39.81 million.

CAW’s annual debt service payments have increased substantially from 2009 to the present. According to the Power Point presentation, the utility’s annual payments were $4.72 million in 2009, $5.1 million in 2010, $5.98 million in 2011, and $6.01 million in 2012. Those annual payments are expected to climb to $7.91 million in 2013, $8.04 million in 2014, and $8.18 million in 2015.

The primary reason for the rate increase is the projected 30-percent increase in debt service. Major projects funded by the debt include: 1) Environmental Protection Agency Stage 2 Rules Compliance, 2) the Sodium Hypochlorite Conversion project; and 3) the surge tank/raw water line project.

CAW’s total operating budgets have increased by 8.7 percent from 2008 to 2013. The utility’s labor costs have increases by 6.2 percent from 2008 to 2013. In 2008, the utility budgeted $20.25 million in labor and benefit costs while budgeting $21.51 million in 2013.

Even though rates are going up, it remains one of the lowest water utility bills among several cities.

Based on average usage, CAW’s current average monthly bill is $12.15 and even when the 2013 rates take effect CAW ratepayers will still be lower than several large regional cities, such as Nashville, Tenn. ($13.62); Dallas, Texas ($14.27); Shreveport, La. ($17.75); Tulsa, Okla. ($18.25); St. Louis, Mo. ($19.46); Louisville, Ky. ($20.63); Springfield, Mo. ($20.75); and Oklahoma City, Okla. ($22.39.). CAW’s rates will be larger than Memphis, that have been $8.94 in 2012. The rate comparison was compiled on Aug. 15.

From 1985-99, North Little Rock monthly water bills were $10.32 and were $13.65 during the years of 2000-02. The rates were lowered to $11.72 during the years of 2008-09.

Part of the problem from CAW is that average monthly consumption has continued to drop in recent years. Average monthly consumption dropped from 8 CCF (100 cubic feet of water) in the years prior to 7 CCF in 2008 to seven CCF in 2008. The decline continued to the rate of 6.5 CCF in 2011. Less water sales means less operating revenue for the utility. CAW is projecting it will sell 18.74 billion gallons of water this year, while that amount will be at 19 billion gallons during the years 2013-15.

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