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Commission hears options to raise water rates as lead-service-line replacement advances
Summary
City staff presented a rate study recommending options including a roughly 13% water-rate increase to fund lead service-line replacements and other upgrades; commissioners asked for benchmarking, phasing options and public education before adopting fee changes.
City staff told the commission that the municipal water system is not bringing in enough revenue to cover operating costs and long-term asset management, and presented four rate scenarios that range from an inflation-only increase to a CPI plus a roughly 13% water increase recommended by the Michigan Rural Water Association.
"The water system currently does not take in enough money to cover its expenses and account for all of the asset management and repair replacement costs that we should have," the staff member leading the presentation said, and noted the study’s baseline assumptions (a per-person usage metric used for scenario modeling). Under the study’s example for a four-person household, the report showed a current combined water and sewer bill of about $152 a month. A CPI-only adjustment would raise that bill by about $7, while the full CPI-plus-MRWA recommendation would move the example household to about $168 a month.
The presentation also tied the rate discussion to active capital work: the drinking-water state revolving fund (SRF) project for lead service-line replacement is moving forward and will require bond-related steps. Staff said the project team has submitted required materials to the engineering firm and that a critical set of plan/spec deadlines remains outstanding.
Commissioners pressed for options that would reduce short-term bill shock: one proposal was a multi-year, phased increase that would reach the needed revenue target over time rather than in a single large jump. Commissioners also requested comparative data from similar Upper Peninsula communities (examples mentioned: Manistique and Newberry) and asked staff to schedule a public presentation by the MRWA consultant before any fee schedule adoption.
Staff said they would return with additional scenarios and comparisons and recommended more public education before the fee schedule is adopted as part of the budget process.
Next steps: staff will prepare alternative scenarios (including phased increases), run peer comparisons, and arrange for the rate-study consultant to present publicly prior to final action on the fee schedule.
