Mount Clemens staff outline modest water and sewer rate increases, warn of sewer cash shortfall

Consultants presented the city’s annual utility rate model at a Mount Clemens City Commission work session and recommended modest commodity-rate increases — 2.6% for water and 2.9% for sewer — effective Oct. 1, with the fixed ready-to-serve charge projected to decline because recent meter replacements raised the total meter count. Danielle (speaker 5), who delivered the presentation, said the changes are proposed so capital projects and reserves can be funded and noted the commission would likely vote on final rates during late-August or early-September budget meetings.

Why it matters: the model balances administrative fixed costs, commodity usage charges and large capital needs over a 10-year planning horizon. Danielle said the study’s earlier phase used a “rip the band aid off” approach to correct long-undercharged rates, and the current proposal aims to smooth increases while keeping projects on schedule. She said a typical single-person household would see roughly a 1% increase (about $0.38 per month), while a family of four using about 67 units would see about a 2.1% rise (about $2.22 per month). The presentation also showed an average resident monthly cost of $87.98.

Model mechanics and local impacts: Danielle explained the ready-to-serve fee (the fixed monthly access charge) is lower in the proposed model because more meters came online after a replacement program, which spreads fixed costs across a larger meter base. She also described wholesale adjustments proposed for neighboring jurisdictions — an increase of $1.65 for Clinton Township and $1.37 for Harrison Township — and noted Selfridge Air National Guard’s contracted rate remains unchanged through 2027.

Cashflow risk and options: staff flagged a potential sewer cash shortfall that could last several years. Danielle told the commission sewer might need temporary internal borrowing from general or water funds to remain solvent until cash levels recover in later years of the model. She recommended the commission consider a higher sewer increase (a 3.5% scenario) to help alleviate pressure and offered to rerun the model at both 3.5% and 4.0% so commissioners could compare resident and business impacts. On a hypothetical scenario applying $5,000,000 to sewer separation work, the model suggested a 4.1% increase would be required this year; staff emphasized grants and low-interest financing would be preferable to large, permanent rate shocks.

Commercial and meter effects: staff provided a commercial example showing a 3-inch commercial service could see a multi‑dozen‑dollar monthly increase in some scenarios and clarified 3-inch services are typically heavy industrial or large commercial accounts. Commissioners and staff also said new digital meters are recording greater consumption than older mechanical meters, which contributed to higher commodity revenue in the model.

Next steps: staff will rerun the model at the higher scenarios, prepare comparative impacts for residents and businesses, continue seeking grants and low-cost financing, and include chosen rate options in the August/September budget approval process. The commission did not vote on rates at the work session.

Quote: “We went with what we call the ‘rip the band aid off’ method,” Danielle said, describing the study’s earlier phase. She later warned that to cover projected sewer work the city is “talking $5,400,000, 5.8,” as an example of the multi‑million-dollar scale of sewer needs.

What’s next: staff will present rerun scenarios and documentation to the commission ahead of budget votes and will continue to pursue outside funding to limit rate impacts on residents.