Traverse City staff outline major billing, metering and collections changes for water and sewer

Traverse City staff on Feb. 10 laid out a package of proposals to change how the city bills water and sewer customers, upgrade aging meters and endpoints, and update collection and shutoff policies. The study-session presentation covered residential and commercial rate design, irrigation-meter billing, technology upgrades that would give customers near-real-time reads, and options for dealing with unpaid accounts where the city no longer can rely on Traverse City Light & Power for shutoffs.

City officials said the changes are meant to align rates with industry standards, provide fairer treatment across customer types and enable faster leak detection. "This is part 2 of the water and sewer rate discussion, which is a review of metering and overall policies and practices," said Janna Robinson, deputy treasurer and finance director, who led the presentation.

The proposals before the commission are largely policy and procedural; no vote was taken at the Feb. 10 study session. Robinson said the city will return to a formal commission meeting with ordinance language and rate comparisons for the coming fiscal year after staff incorporate feedback.

What staff proposed - Rate methodology: Staff proposed moving away from the current monthly base rate that bundles a first 6 hundred cubic feet (CCF) of usage and instead charging a “ready-to-serve” fee that recovers budgeted operational expenditures (less customer-accounting costs) and a separate constant consumption charge. For residential customers staff proposed a discounted consumption rate for the first 4 CCF, then a single uniform consumption rate thereafter; commercial customers would be charged a single consumption rate for all usage.

- Out-of-city customers: The city serves a small share of non‑annexed customers (about 2.4% of accounts). Robinson said staff is not proposing to change the existing premium for out‑of‑city accounts (currently 1.5 times the in‑city base) because those rates were negotiated with townships and do not duplicate city property taxes.

- Solar energy credit: The wastewater solar-plus-storage project contractor (Jacobs) estimated about $100,000 per year in energy savings. Applied to the sewer ready-to-serve fee, staff estimated that would lower the sewer ready-to-serve fee by roughly 2.8% and could equal about $1.09 per in‑city customer per month under the scenario shown; staff cautioned that such savings could be offset by other operating-cost changes in future years.

- Irrigation billing and meters: Staff described three irrigation-account types in the system: (1) most residential customers with a single meter who receive a winter-quarter adjustment (January–March average) for summer sewer billing; (2) properties with a separate irrigation meter (about 435 meters total, of which roughly 60 are residential and the rest mostly commercial, staff said); and (3) a small subset (about 97) with a deduct/dedicated meter that measures water not returning to the sewer.

To reduce customer confusion staff proposed two ordinance changes: allow irrigation meters to be billed year‑round on the same bill (current city ordinance limits irrigation billing to May 31–Oct 31) and to allow the city to use the prior quarter (Oct–Dec) as the winter average when the January–March winter quarter reads are zero (to better capture seasonal vacancies or snowbirds). For irrigation meters staff proposed charging a year‑round ready-to-serve charge equal to one-quarter of the corresponding water-meter ready-to-serve fee and billing irrigation consumption at the second residential tier (shown at $2.17 per CCF in the packet example) with no 6‑CCF inclusion on the irrigation meter.

Robinson said that under one example spread across the year the proposed approach would produce an annual net change of about $27.48 for customers who typically use more than 6 CCF in irrigation months; the city will provide individualized comparisons when it returns with proposed FY25–26 rates.

- One-off / uncommon customers: Robinson noted breweries and other businesses that use water that does not return to the sewer present special metering challenges. Staff said the water‑sewer team would work with affected customers and the city attorney to update ordinance language and, where necessary, require customer-funded plumbing or metering changes so billing reflects sewer returns accurately.

Metering technology and customer portal Staff described delays and failures with earlier remote-read endpoints and outlined a multi-year shift to Badger meters with "beacon" cellular endpoints that provide four daily reads in 15‑minute increments and integrate with a customer-facing portal (Ion Water).

Justin Roy, superintendent of water and sewer, explained the vendor change and warranties for meters: "It's a 10‑year guarantee with a 20‑year possibility. If they fail before 10 years, we get a new one; then it's prorated." Robinson said the new endpoints give staff much faster, more reliable reads and enable early leak detection.

Staff showed examples of recent undetected leaks that produced substantial usage charges (one commercial account had roughly $722 of extra water charges in a month tied to a leak; another example showed about $2,400 in water usage tied to an undetected leak). The Ion Water portal would let customers view near-real-time consumption, enroll in leak alerts and receive earlier notice from the utility.

Costs and timing for endpoints Robinson said the cellular endpoint, portal and billing interfaces carry an incremental operating cost staff estimated at $0.90 per meter per month. That charge is currently absorbed by the city at a small scale (Robinson reported about $109 per month now) but would require commission-level approval if full deployment raised the monthly city expense to roughly $7,110 per month under full rollout assumptions. Staff said the city expects to remove older manual-read meters and replace delayed endpoints; about 303 manual or legacy meters remained in the field as of Feb. 10 and staff expected to complete vendor replacement of remaining 2‑inch commercial meters in spring 2025.

Collections, shutoffs and policy choices Robinson and commissioners discussed that the city no longer can rely on Traverse City Light & Power to perform electric shutoffs as a collection tool for utility debt. The city’s accounts receivable balance for unpaid utility bills is relatively small in the historical record (Robinson cited roughly $16,000 outstanding over 20 years and about $4,000 in accruals in the last year), but the commission pressed staff for options.

Options staff described included: enhanced outreach and payment-plan efforts for delinquencies; a requirement that landlords put accounts in the owner’s name or post a deposit equal to a year of ready-to-serve fees for rental properties; use of restricted-flow remote meters that limit hourly flow to preserve basic access while constraining excessive usage; liening unpaid balances to property tax bills where allowed; or pursuing legal collections (staff warned legal action can cost more than recovery). Robinson said some rental properties submit affidavits that remove lien rights, complicating collection.

What happens next Robinson said staff will draft ordinance language for the winter-quarter adjustment and year‑round irrigation billing (referencing city code sections shown in the presentation as 10‑43‑39 and 10‑44.16) and return to a commission meeting for formal consideration. She also said staff would prepare individualized bill-comparison tools for customers, provide more detailed cost breakdowns of operational expenditures included in the ready-to-serve calculation, and bring the endpoint/cellular cost decision to the commission for approval when full deployment reaches the manager-approval threshold.

Discussion vs. decisions The Feb. 10 session was a study session: commissioners asked for more detail and follow-up; no ordinances or rates were adopted. Robinson said staff intends to: (a) circulate the supplemental slides and spreadsheets commissioners requested; (b) draft ordinance language for the winter-quarter and irrigation changes; and (c) return with recommended FY25–26 rates that compare old and proposed methods.

Speakers quoted or identified in the discussion Janna Robinson, deputy treasurer/finance director (presenter); Justin Roy, superintendent, water and sewer; Liz (introduced Robinson; role not specified in the transcript); Mayor Shamro; Commissioner Shaw; Commissioner Werner; representatives of Traverse City Light & Power (Carla, referenced); utility billing and water‑sewer staff.

Why it matters If the commission adopts the proposed approach, many customers would begin to see usage billed differently (winter-quarter adjustments, no bundled free 6‑CCF inside a base rate) and customers with irrigation meters could be billed year‑round with a different ready‑to‑serve basis. The meter and endpoint upgrades would also let customers detect leaks earlier and reduce large surprise bills, while collection and shutoff policy changes would shift how the city handles nonpayment for rental properties and other difficult-to-collect accounts.

Ending Staff said it will return with written ordinance language, refined rate comparisons and customer-facing bill‑comparison tools. The commission gave direction for more detail on the ready-to-serve composition, irrigation meter economics and options for dealing with rental-account delinquencies; formal action will require a future commission meeting.