Council Discusses Utility Rates

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by Terry Rogers

 

 

 

On Monday, January 13, Milford City Council discussed water, wastewater and solid waste rates for the next five years. The rates were recommended by Dawn Lund of Utility Financial Solutions at a meeting on December 9, 2019. The rates for 2020 will take effect March 1st to allow enough time to notify customers. Subsequent rate changes will take place on January 1st of each year.

“As noted in the study, the rates proposed do not consider an annual Payment in Lieu of Taxes (PILOT) to the General Fund,” Mark Whitfield Public Works Director and Acting City Manager, explained. “The present and future reserve funds in each utility are necessary for future capital improvement projects necessary for that utility. It is important to note that any utility reserve funds used to fund other projects outside the utility would need to be paid back to the utility in order to adequately fund future projects.”

Because the Solid Waste Fund is expected to have inadequate funds within the next five years, staff recommended that a $500,000 loan be issued to that department from reserves in order to adequately cover the cost of expected capital purchases and to maintain an adequate operating balance. One of the items the City will need for this year that is not in the budget is a new refuse truck which will cost about $500,000.The loan would be repaid to reserves over the next seven years with no interest.

Whitfield also explained that Delaware Municipal Electric Corporation (DEMEC) informed the City in December that there would be a slight rate adjustment which could be passed along to customers as a Power Cost Adjustment (PCA). According to Whitfield, the deduction will provide a reduction in electric rates for this year of around 43 cents per customer which will greatly benefit larger customers like Sea Watch and Perdue, Whitfield explained. Councilwoman Katrina Wilson said that the City will pass on any reductions in electric, no matter how small, to save customers in electric fees. Council voted unanimously to pass the reduction on to the public.

Councilman Doug Morrow asked if the rate increase should be discussed at the committee level before the decision is made rather than just accept the presentation by UFS. Councilman Todd Culotta agreed, saying that he felt there needed to be more discussion and he wondered if this is something we should accept public comment on the rates.

“I think we saw a pretty thorough presentation at 9 PM when her flight was delayed,” Councilman Jason James said. “She was very much in depth with what she presented. We don’t want to have to bring her back here to answer questions that we could have asked when she was here before.” Councilman Morrow questioned whether the reserves used in the USF calculations and Councilman James reminded Council that she walked everyone through how she came to use the numbers she used as well as detailed information on the rates.

Based on the recommendations presented by UFS, rates would increase in solid waste from $26.00 to $27.05 in the first year, to $28.15 the second, $29.30 the third, $30.50 the fourth and $31.75 the final year. Sewer rates would increase by 3.9 percent per year with the average customer seeing an increase of 50 cents per month each year. Water rates would increase 3.9 percent each year, increasing the average bill by 13 cents per month.

After much discussion, Council voted to hold a workshop with public comment about the rate increases before voting on the rates.

 

 

 

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