Sep. 15--As of Oct. 1, DU customers will pay more for one of life's necessities -- water.

No resident, industry or business voiced opposition to the proposed Decatur Utilities water and wastewater rate hikes, which split the City Council. The ordinances adjusting the utility fees narrowly passed Monday night by a 3-2 vote.

Council President Greg Reeves joined Councilmen Roger Anders and Gary Hammon in support of the increases. Opposition came from Councilmen Billy Jackson and Ronny Russell.

"I understand over time expenses will go up," Jackson said. "But before I pass this on, I have to be sure DU is being frugal and fiscally responsible, if we are asking residents to pay more. In this economic climate, we need to take every measure we can to save money."

For the average residential customer, the monthly water bill will increase by 75 cents beginning next month. In November, the sewer bill for a typical single-family household will rise by $4.23.

The approved ordinance will continue to raise water and sewer rates gradually during a three-year period, said DU General Manager Ray Hardin.

By 2012, DU officials estimate, the combined water and wastewater rates for residential customers will be $38.56, or $12.66 more than the average monthly charges in 2009.

While the increased rates will affect residential customers, industrial customers and developers will experience the harshest financial impact.

DU based the proportional rate changes on pipe size and monthly water usage. The larger the pipe and the more water used translates to a higher fee. Industries using four-inch mains will see a $1,584 hike in monthly water and sewer bills.

If rates remained static, Burton & Associates and ADL Engineering Services warned, DU would face a deficit of $6.5 million by 2012. The utility commissioned the two consulting firms to evaluate the water and wastewater systems' rate structures last year.

Revenue flat

"The total revenue is expected to stay flat ... while the expenses are expected to increase," Hardin said.

Hardin attributed the anticipated future deficit to regulatory requirements, capital improvements, reduced revenue stemming from industrial closures and stricter statewide environmental regulations.

Along with the rate increases, the City Council approved the implementation of impact fees.

Assessed against developers, the impact fees cover the capital costs of extending service to new developments. DU will begin instituting the new charges in October 2010. Developers will pay the one-time fee, based on pipe size, during a three-year period.

For developers installing 1-inch meters, the impact fee for water and sewer service will be $3,065. Developers using a 12-inch meter, an industrial size, will incur an $183,900 impact charge.

Prior to Monday night, DU conducted meetings with the City Council, industries, developers, economic development professionals and the Decatur-Morgan County Chamber of Commerce.

The last water and sewer rate increases occurred in 2004, an action the bond raters in New York advised against.

"The bond rating company said they didn't like to see one-time increases every four or five years; they would prefer to see regular financial analysis every year," Hardin said.

Beginning in fiscal 2013, DU plans to follow the advice of the bond raters and conduct annual reviews.

"The system we are putting in place will actually keep us up to date so that every five years we don't have a chunk," said Anders. "We are doing it consistently with cost of living expenses."

The approved rate adjustments are the second major financial and operational change for DU in the past 14 months. In July 2008, the City Council approved a sewer-use ordinance designed to increase fees for industries discharging hard-to-treat chemicals. DU anticipated receiving $2.1 million a year in surcharges garnered from the sewer-use ordinance.

The approved rate hike comes after five years with no increases. Officials recommended reviewing the water and sewer rates on an annual basis.

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