Editors note: This is the first in a series of stories relating to the potential increase of utility rates to all Shawnee residential and commercial customers. Future articles will discuss the major projects planned, the history of the water and sewer systems and will include comments from residential and commercial users.
Shawnee City commissioners will be asked in September to approve water and sewer base rate increases for the first five years of the utility department’s $55 million, 10-year plan for “vital” improvements, replacements and repairs to those infrastructures, officials said.
Municipal Finance Services of Edmond conducted a utility system cash needs analysis for Shawnee. The study’s purpose was to focus on Shawnee Municipal Authority’s historical trends regarding water and wastewater expenses and to project how the city could receive sufficient total revenue for the proper operation and maintenance of both systems in the near future.
The study also included current indebtedness amounts and considered payment of those debts while looking at future costs associated with capital improvements to the water and sewer systems.
The results were proposed increases in base water and sewer rates for all customers, residential and commercial, including those within the city limits and those outside the city. Base rates are those costs for the initial 1,000 gallons used by customers.
The increases would begin to appear on customers’ bills in October or November, this year, if commissioners approve the proposals in early September.
“The rates would begin to increase when water usage is less,” Mayor Linda Peterson said. “We’re giving users enough time to adjust their future plans, their budgets. To implement this overnight wouldn’t be the way to go. We want to get the word out before it actually affects them; we don’t take this lightly.”
The proposed increases for residential customers within the city limits of Shawnee would raise the base rates for water and sewage, combined, from $10.95 per month to $17.25. However, the average residential customer uses about 5,000 gallons, which means an average customer now paying $35.38 for water and sewage would pay $43.11 with the initial increase.
The increase would raise base rates for commercial customers inside city limits, who use an average of 116,000 gallons per month for combined water and sewage, from $689.17 per month to $773.37 for the same number of gallons used per month.
“We have a 10-year capital improvement plan for about $55 million but what we want approval on from commissioners is the first five years of that plan,” Jim Bierd, utility director, said. “We’ll be asking for about $30 million. We make a 10-year plan but we ask for five years of it at a time. Every five years, we’ll be revamping these things.”
The city has looked at ways of funding those multi-million dollar projects for several years.
Recent presentations to this point have concerned the 10-year plan, in addition to the percentage of base rate increases each fiscal year based on that plan.
Bierd said it is important to plan for at least an additional five years beyond what city commissioners will be asked to approve to allow flexibility and room for unexpected adjustments.
“We are trying to get away from crisis management and get toward preventative measures,” Bierd said. “It’s more costly, in the long run, to patch and do a little at a time. We always want to have five years of gray area beyond our five-year plan.”
Peterson agreed.
“As we move out, things will come up,” Peterson said.
City Manager Brian McDougal also agreed.
“This gives us a picture of what we need to do,” McDougal said. “We constantly plan, monitor and adjust.”
Officials said the water rate increases would pay for water needs and the sewer rate hikes would pay for wastewater needs.
“We’re not just going up on a whim,” Peterson said. “If we approve this, it will be truly tied to capital improvements. The first increase will be for the first project. Water and sewer rate increases are to pay for water and sewer projects, not other projects.”
City officials will determine what the first projects will be at a later date.
McDougal explained there are three important aspects for customers to remember concerning the city’s water and sewer systems and the rate increases. “This is important because, first, in the last 20 years, we haven’t addressed capital improvement needs of those systems,” McDougal said. “Second, the rate structure is changing to reflect a base rate increase — which is a requirement of the Oklahoma Water Resources Board and loans through them, as a minimum, to insure the cash gets back to them. It’s for bank loan purposes. And [third,] this is a more you use, more you pay system — a requirement the Department of Environmental Quality wants.”
The “more you use, more you pay” system would protect residential customers from paying costs for which they should not be responsible, McDougal said.
“Grandma and grandpa on a fixed income shouldn’t have to support big industry,” he added. “This proposed plan moves us away from a ‘more you use, less you pay’ system.”
In addition, planning 10 years out helps the city when applying for loans, or grants, because banks and the OWRB want to know that the city has thoroughly planned for repayment of any loans they acquire, officials said.
“We have applied for grants, but there’s not billions of dollars out there waiting for someone to take them,” Peterson said.
And the competition for what is out there in grants or stimulus funds is steep, McDougal said. There are at least 500 water systems competing for the $64 million, half for water and half for sewer needs, provided to Oklahoma by the federal government, he said.
“If we were approved for grants to apply to these capital improvement projects, we would adjust the utility rates accordingly,” McDougal said.
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Johnna Ray may be reached at 214-3934.
SHAWNEE, Okla. —
