Martinsville Bulletin, Inc.
P. O. Box 3711
204 Broad Street
Martinsville, Virginia 24115
Toll Free: 800-234-6575
PSA to hold public hearing on proposed rate changes
Scheduled for May 20
Tuesday, March 19, 2013
By PAUL COLLINS - Bulletin Staff Writer
The Henry County Public Service Authority, which last adjusted its rates in 2006, voted Monday night to set a public hearing for May 20 to discuss proposed water and sewer rate increases.
The public hearing will be at 7 p.m. in the Summerlin meeting room on the first floor of the Henry County Administration Building.
Jo Biggs of the Ridgeway District asked the PSA board to do something to help elderly people who use small amounts of water.
“I think we need a break,” she said.
Lois Turner, also of the Ridgeway District, told the board she agreed with Biggs.
Without rate increases, “in five years, we’ll be out of cash,” Tim Hall told the PSA board. Hall is the Henry County administrator and general manager of the PSA.
With no rate increases, the PSA’s projected cash position (as of June 30) is expected to decline from $4,058,448 in fiscal year 2013 (the current year), to $3,031.961 in FY 2014, to $1,930,920 in FY 2015, to $505,991 in FY 2016, to minus $1,209,950 in FY 2017 to minus $2,900,456 in FY 2018, according to a report by Draper Aden Associates of Charlottesville. The firm was commissioned by the PSA to conduct a rate study.
Residential water and sewer rates each have been proposed to increase from the current $26 a month to $30 a month for up to 4,000 gallons of water and up to 4,000 gallons of sewer, according to PSA documents. Sewer is based on the amount of water consumed.
That means residential customers would pay a minimum of $60 a month for 4,000 gallons (or less) use of water and sewer rather than the current combined water/sewer monthly rate of $52 ($26 for each water and sewer).
Residential customers also would pay $4.70 a month, up from the current $4 a month, for every additional 1,000 gallons above the minimum for each water and sewer. If a customer uses 5,000 gallons a month, which is 1,000 gallons over the minimum, that customer would pay $69.40 a month.
Residential customers on the PSA’s senior citizen/disabled discount would see that discount rise from $5 a month to $7 a month for water and for sewer. That means their base bill would increase only $2 a month for each service, from the current $21 a month for each service to $23 a month for each service.
Rates for commercial customers would increase from the current $39 a month to $45 a month (based on 4,000 gallons a month) for each water and sewer.
For every 1,000 gallons over that minimum, the commercial customer would pay an additional $7 for each water and sewer. Currently, commercial customers pay an additional $6 a month for every 1,000 gallons over the minimum per service.
Rates for institutional customers, such as county and other governmental offices, would increase from the current $59.50 a month to $68.50 a month for each water and sewer (each based on 6,000 gallons a month). Institutional customers would pay an additional $8.10 for every 1,000 gallons over the minimum 6,000 gallons for water and $8.10 for sewer. Currently institutional customers pay $7 per month for every 1,000 gallons above the minimum for each water and sewer, according to PSA documents.
Water connection fees would increase from $800 (the current charge) to $1,000 for a three-quarter-inch connection and to $1,200 for a one-inch connection. All larger connections would be charged “at cost.”
Sewer connection fees would increase from $800 (the current charge) to $1,000 for a four-inch connection and to $1,200 for a six-inch connection.
Facility fees for each water and sewer would increase for a three-quarter-inch meter from $500 (the current charge) to $750, and for a one-inch meter from $1,250 (the current charge) to $1,500.
Sewer facility fees would increase for a three-quarter-inch meter from $500 currently to $750 and for a one-inch meter from $1,250 currently to $1,500.
Since the PSA last adjusted its rates in 2006, “our community and our country have gone through a significant recession and customer growth has been slow,” according to a PSA brochure. “With those factors in place, the PSA Board of Directors and staff worked diligently to manage costs and still provide the best service we could. In fact, we were able to stretch out our 2006 rate adjustment for seven years, even though it was supposed to get us through only five years.
“Another issue is the PSA’s infrastructure. We have nearly 600 miles worth of pipe in the Henry County ground, and much of that infrastructure is in need of replacing or upgrading. Without adequate cash flow, we would be unable to make those upgrades.”
Another reason for increasing rates is that the PSA’s current rates are too low for some funding agencies to consider the PSA for grants for projects. “With the new rates the PSA may qualify for low-interest loans (which have to be repaid) from Rural Development, the Virginia Department of Health and the Virginia Department of Environmental Quality. Rural Development also provides grants (money that doesn’t have to be repaid) for rural localities to upgrade or install new water and sewer lines. Certainly we would prefer grant money over loans; however, the proposed rates still would not meet the RD requirements for those grants,” the brochure states.
Also, rate increases are needed because the PSA is bound by law to comply with a mandatory debt-coverage ratio of 20 percent of operating costs. “If we don’t maintain a 20 percent ‘cushion’ as mandated, the bondholders can take over the PSA and turn it over to an entity that would run it for profit. That would mean your rates could skyrocket,” a PSA brochure states.