Battle Creek adopts five‑year water and sewer rate plan after debate over readiness fees and Blue Oval flows

Cole Sullivan, a financial consultant with Stantec who prepared the city’s five‑year rate study, presented the proposed plan that would smooth rate increases and fund a $45 million water CIP and a $38.3 million wastewater CIP while meeting bond covenants and fund‑balance targets.

Sullivan said the recommended plan proposes a 1.5% annual indexed increase for water and a 2.5% annual indexed increase for sewer from fiscal 2027 through 2031. He told the commission that modeled contractual flows to Marshall tied to the Blue Oval project reduced the rate increases city customers would otherwise face: "we are finding the revenues are a net benefit to the city and actually keeping the rates proposed down" (Cole Sullivan).

The presentation laid out major assumptions: a 3.3% annual escalation for capital costs, 4% annual O&M escalation, use of the city’s FY2025 trial balances as starting points, and an SRF drinking water loan (about $24.5 million with roughly $5 million in principal forgiveness) that produces an estimated net new annual debt service of about $1.22 million once projects are completed.

Commissioners asked detailed questions about who bears costs for expanded capacity and how readiness fees apply. Commissioner Simmons said residents see readiness charges that can exceed usage charges and pressed Sullivan to explain whether Blue Oval is subsidized by local customers. Sullivan responded that, per the scenarios the consultant ran, the assumed Blue Oval/Marshall flows lower the needed rate increases compared with a no‑flow scenario and that a later wholesale rate analysis should be completed once actual flows are observed.

Residents who spoke during the public comment period urged the commission to reconsider across‑the‑board readiness fee increases and suggested tiered approaches to protect seniors and low‑income households. "When a readiness fee exceeds the cost of service being used, it’s reasonable to ask whether the system is fair," said Joe Harris of Battle Creek. Several speakers also raised longstanding concerns about lead service lines and the pace of replacement.

After discussion and a failed motion to postpone consideration to the next meeting (the postponement motion resulted in a tie), the commission voted to approve Resolution 414 to set water and sewer rates for the FY2026–2030 period, with implementation dates and schedules specified for contributing jurisdictions. The resolution was adopted as presented; the transcript does not record a roll‑call tally in the public minutes.

The city manager and staff emphasized the next steps: monitor Blue Oval-related flows, consider a wholesale cost‑of‑service study when more data are available, and continue lead service line replacement and water main prioritization. The commission and several residents said they want future reviews to consider equity and targeted relief options for vulnerable households.

The commission approved Resolution 414; staff will return with further analysis as flows are observed and as the city implements the capital program.