Port Orchard consultants propose simpler sewer rate structure; residential bills to fall initially while some businesses face higher charges

Taghi Acker, a consultant with FCS Group, and Zach Hazel of Bowman Group presented results of a comprehensive sewer utility rate study to the Port Orchard City Council on June 10, saying the utility needs roughly 3.5% more revenue per year through 2030 to pay operating, capital and debt-service costs. Under the consultants27 preferred approach the city would simplify the current 21-class rate schedule to a per-ERU (equivalent residential unit) charge, lowering the typical single-family bimonthly bill in 2026 from $163 to about $151.58 while raising the nonresidential per-ERU charge to roughly $235.

The study matters because the city plans about $50 million in sewer capital work over the next six years (unescalated), which the consultants escalated to about $60 million using a 3.5% construction-inflation assumption. Consultants modeled funding from grants, low-cost state loans, developer contributions and rates; their recommended hybrid approach spreads large project costs partly through borrowing and partly by rates to smooth customer impacts.

Consultants described the study in three parts: a revenue-requirement (how large the total revenue pie must be), a cost-of-service analysis (how to slice that pie between residential and nonresidential customers), and rate design (how to bill). The cost-of-service work found residential customers were paying about 107% of their cost to serve while nonresidential customers were paying about 76%, meaning nonresidential accounts on average have been subsidized by residential customers. The consultants therefore proposed moving to an ERU-based unit charge using existing annual ERU counts (measured in winter months to avoid irrigation bias) and applying a weighting that increases nonresidential per-ERU charges.

The presentation included examples: a typical single-family customer would see a modest bill decrease in the early years of the proposed schedule. A large restaurant and the county jail were given as examples of accounts that would see substantial increases under the ERU-based charge because measured flows and ERU counts for those facilities are high relative to how they are billed today. The consultants said some customers27 bills would fall while others would rise; the change is intended to align bills more closely with measured impact on the sewer system and the city27s obligations to the South Kitsap Water Reclamation Facility (SKWRF).

Council members and staff raised several operational and fairness questions during and after the presentation. Council members pressed how the ERU counts are measured (winter-period water use) and whether facilities that do not discharge to the sewer system (for example some schools with septic or grinder pumps) would be treated fairly; consultants and staff said they use the city27s existing ERU-count process and that accounts are reviewed individually when anomalies appear. Several council members said they wanted more time to digest how the changes would affect local businesses, schools and institutional customers. Staff and consultants said implementation would require code changes, billing-system updates and public outreach and that the earliest the new structure could be implemented is calendar year 2026.

Council members also asked about reserve and debt policies used to size the revenue requirement; the consultants noted the city has an adopted general reserve policy (602090 days of operating revenues) and that debt-service coverage requirements (common practice for revenue bonds) were modeled where appropriate. The study lists a mix of funding sources for the capital program: roughly one-third from low-cost loans the city has already secured, a slice from developer/county/WSDOT contributions, a small portion of grants, and the remainder from rates and cash on hand.

Mayor and council directed staff to return with the sewer plan and proposed rate ordinance later this year. Staff said they plan to bring the item back in late summer to early fall for further study with an implementation target of 2026, allowing time for code updates, stakeholder outreach and system changes.

“It27s trying to get us to a simpler and more fair way to bill customers,” Acker said during the presentation, while Zach Hazel walked the council through sample bills and the ERU math.

The consultants and city staff emphasized the study did not adopt rates that night; it was a presentation and discussion. The council asked for more examples, requests for follow-up on specific large accounts (including vacant commercial accounts), and additional outreach to business owners and institutions before any ordinance is adopted.