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Sewer Rates Reduced Following Comprehensive Rate Study

Posted on: April 12, 2024 - 11:01am
Official logo for the town of North Beach.

The Town of North Beach recently enlisted the expertise of the Maryland Center for Environmental Training (MCET) to conduct a comprehensive water and sewer rate study. Based on results of the study and recommendations from MCET, the Town of North Beach is adjusting the sewer rates that went into effect with the FY2024 budget. 

OVERVIEW OF CURRENT RATES

The current FY2024 water and sewer rates are as follows:

Water: The current minimum quarterly rate for water is $50.00. The current water usage fee is $9.00 per 1,000 gallons over the 3,000-gallon minimum. 

Sewer: The current minimum quarterly rate for sewer is $172.00. The current sewer usage fee is $13.00 per 1,000 gallons over the 3,000-gallon minimum. 

SUMMARY OF RATE STUDY RECOMMENDATIONS

The key recommendations from the rate study emphasize the need for adjustments to ensure financial sustainability and to meet operational requirements. Specific changes quoted from Page 25 of the Water and Sewer Rate Study are as follows:

  1. Future water rates need to be increased 5% annually, depending on desired Water Fund cash balances.
  2. Future sewer rates need to be decreased in FY 2025 to FY 2023 levels. No rate increases are likely needed until FY 2029. 

On Page 23 of the Water and Sewer Rate Study, it is recommended that the Town set up a reserve in the Sewer Fund cash balance equal to 50% of annual expenditures for current and future capital needs. Any revenue deficits for the sewer fund would be covered by this reserve fund. This indicates a financial safety net to ensure the operational continuity of these essential services.

ADJUSTMENTS TO SEWER RATES; NO CHANGE TO WATER RATES

The adjustments to the current FY2024 water and sewer rates are as follows:

Water: The current FY2024 water rates will remain unchanged at this time. The rate study recommendations of an increase to water rates should be addressed in future budget discussions.

Sewer: The current FY2024 minimum quarterly rate of $172.00 will be reduced to $126.00. The current FY2024 sewer usage fee will be reduced to $7.25 per 1,000 gallons over the 3,000-gallon minimum.

NEXT STEPS

The proposed sewer rate reductions will be implemented through the following steps:

  1. The proposed adjustments were presented and discussed with the Mayor and Town Council at the Town Council Meeting on April 11, 2024.
  2. The new rate structure has been incorporated into the revised fee schedule attached to Resolution 24-01, which was presented to the Town Council at the meeting referenced above. Resolution 24-01 was approved and will immediately take effect.
  3. The sewer rates will immediately be adjusted in Muni-Link, the utility billing software.
  4. Customers will see the reduced sewer rates in their April 2024 billing and subsequently in their July 2024 billing. Additionally, customers will receive a credit for the 1st Quarter/October 2023 and 2nd Quarter/January 2024 billings. The credits will be determined by applying the minimum quarterly rate of $126.00 and the reduced rate of $7.25 per 1,000 gallons over the 3,000-gallon minimum to each customer's usage for these billings.

MOVING FORWARD

Sewer Rate Stability: The Water and Sewer Rate Study projects the stabilization of sewer rates until FY 2028. However, the town suggests evaluating sewer rates annually and discussing whether there is a need for smaller incremental adjustments to cover any unexpected costs, revenue needs, and the ongoing financial health of the sewer fund, rather than a sudden, large rate increase in FY 2029.

Water Rate Increases: The Water and Sewer Rate Study recommends that water rates increase by 5% annually, from FY2025 through FY2028 to address rising costs and maintain financial sustainability for water services.