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Higher utility rates coming to Buckley

An aging sewer and water system, along with patterns of water conservation, will be reflected in higher utility rates for Buckley residents in 2011.

The budgeted expenditures for utilities – gas, water, sewer, streets and stormwater drainage – have increased across the board in amounts ranging from the tens of thousands of dollars to, in the case of the water capital project fund, more than $1 million. Projected revenues, collected from utilities fees, have increased to match.

The increase was cause for one city councilman, Doug Harple, to vote against passing the budget in the Nov. 22 meeting.

“We’re looking at an increase to utilities, water rates are going up 7.2 percent,” Harple said. “I can’t support that. The economy’s bad, people are out of work, and we’re raising their (utilities costs).”

So why do Buckley residents face increased utilities costs on their bills?

The short answer is that funding for utilities falls in a budget category known as enterprise funds. Enterprise funds, which include utilities but also encompass services like the cemetery, must operate from revenues they generate, like a private business. Enterprise operations cannot draw from the city’s general fund, which gains revenues from taxes and fines.

“Utilities are a nonprofit operation of the city,” City Administrator Dave Schmidt said. “Utilities have to be self-supporting, so it’s difficult to hit that exact amount you need.”

In a city that owns its own utilities, there’s a political balancing act in setting rates for customers, Schmidt said.

“It’s a political battle each year to set rates where they should be, where you can support the system without increasing costs on consumers” he said. “If a private utility took it over, the political aspect would go away.

“Granted, elected officials want to put rates where it’s not a burden on customers, but the costs are still there and need to be covered.”

Those costs are numerous for a city that owns its own utilities, as Buckley does. By owning utilities, the city is financially liable for the equipment, personnel and capital required to run them.

“It’s one thing when you have an expanding customer base, but where we are there is a pseudo-moratorium on growth,” Schmidt said. “The sewer ran out of capacity for growth in 1993 or 1994. During that 16- to 17-year period, we’ve been allowed small amounts of growth to go in as (Department of Ecology) allowed. But when the building boom occurred in the 1990s and early 2000s, we saw none of that.”

The cost of capital – the infrastructure for providing utilities – is an immediate cost on utilities that the city has recently been forced to face in terms of its aging water system.

“One of the things we’ve had to deal with as life goes on is setting aside money for depreciation (of water pipes, hydrants, wells and the transmission main),” City Engineer Dominic Miller said.

Non-moving components of the water system such as duct line or AC pipes have a life expectancy of 25 to 50 years, Miller said. Components with moving parts such as the Elk Heights water pressure booster station have a 20-year maximum life span, he said.

Furthermore, replacing a pipeline isn’t just a matter of the cost of a new pipe, Miller said. Sidewalks and roads must be torn up and replaced with each replacement, the cost of which would be covered by connection fees in a growth system. In a no-growth system, there are few-to-no connection fees to draw on, placing the expense on month-to-month fees.

But perhaps most surprising is that, according to Schmidt, water conservation at the consumer level has contributed to increasing rates, when done in a no-growth system.

“Our basic revenue is from sales,” he said. “If people, during a recession, choose to conserve water, you still have fixed costs and since utilities can’t operate at a loss, rates have to go up. Which is kind of counter-productive, which is part of the problem the council faces.

“The state is encouraging conservation, and conservation nationwide is a good thing. But in a fixed system, we end up chasing our tail. People conserve more to save money, and then we have to raise the rates, and then people conserve more to save money and so on.”

There’s no answer to the problem yet, but the Streets and Utilities Committee will be discussing the issue during its monthly meeting in January.

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