Water and wastewater rates to increase July 1

Fayetteville Public Utilities (FPU) will raise water rates by three percent and wastewater rates by six percent, based on recommendations by the Municipal Technical Advisory Service (MTAS). These rate increases will be effective July 1.

MTAS provides technical assistance to city municipal systems like Fayetteville Public Utilities and conducts annual rate studies weighing the system’s operational costs against its revenues.

Under the new rate structure for FPU water and wastewater services, the average residential water bill for customers inside the city, based on 5,000 gallons of usage, will be $32.27, up from the average of $31.33 currently. Wastewater rates based on the same use will be $51.04, up from the current average of $48.15.

The minimum residential water and sewer bills for customers inside the city will also increase. Based on a minimum of 100 cubic feet usage, the minimum water bill increases from $9.18 to $9.46. The minimum residential sewer bill will increase from $14.09 to $14.94.

“In order to fund the capital investment plan and satisfy state funding requirements for municipal enterprises, FPU’s water and wastewater departments must plan toward continued revenue enhancement in order to sustain operations,” says Ralph Cross, a consultant with MTAS who recently met with FPU’s board of directors to discuss the latest rate study which eyes projects up to five years down the road. Cross recommended annual reviews of FPU’s financial condition. 

“Even with the recommendations to increase revenue, operating and non-operating revenue is projected to decline throughout the study period and not cover all expenses,” he noted.

The loss of Goodman Manufacturing during the five-year study period is expected to greatly impact revenue.

Annual revenue increases are currently projected at four percent for water and seven percent for wastewater in 2016 and three percent for water and six percent for each of the following three years. Cross states that those predictions will be re-visited each year when the rate study is completed.

While Cross noted that FPU’s customer base is growing slowly and that FPU is also expected to benefit by increased revenues from a contract with the Lincoln County Sewer System in the near future.

Cross also commended FPU management for controlling expenses. He noted that FPU’s manageable expenses have not increased significantly since fiscal year 2008-09. In fact, FPU’s manageable expenses have remained flat since that time. Cross also noted that those expenses out of management’s control continue to rise.

“Depreciation expense, an operating expense, continues to rise with investments in plant and equipment,” Cross adds. “Internet costs, a non-operating expense, continue to rise with the use of debt proceeds.”

“Our operations and maintenance costs continue to increase as we continue to upgrade both our water and wastewater plants,” says FPU’s CEO and General Manager Britt Dye. “We continue work to upgrade our aging wastewater plant to meet stricter regulations. We are also building Fayetteville’s new water treatment plant. Costs associated with system engineering, construction and upgrades of FPU’s water and wastewater infrastructure are ongoing concerns.”

“Quality and reliable water and wastewater services are very critical to our community’s public health, safety, and quality of life,” says Dye. “This is why FPU is constantly working to improve conditions and operations of our facilities. Under stricter environmental regulations and requirements, forcing utilities to raise the bar when it comes to water quality and wastewater treatment, we are doing what is necessary to improve the services we provide while also securing our treatment plant operations to serve our future customers.”

Over the past fiscal year, FPU has completed major upgrades of Fayetteville’s wastewater system by installing new sewer lines in the Tanyard Branch and Laten Bottom areas. FPU is also mid-way in constructing its new water treatment plant on Eldad Road which includes a state-of-the-art membrane filtration system and has the capability to produce clean drinking water for the next 50 years of projected community growth.