QuickStory: 'Water Rates 101' Sounds Like Rate Increase

Water rates weren’t part of the discussion at a Special Committee of the Whole meeting Monday night, but they were the elephant in the room. 

City Council members heard the first installment of “Water Rates 101,” a presentation by Municipal & Financial Services Group, the consultants examining Geneva’s water and sewer rate structure.

David Hyder, vice president of the group, led a presentation that will resume again in May and in June. The June presentation will include a recommendation of rates and a financial plan.

Mayor Kevin Burns declined to speculate whether the consultants will recommend a rate increase, but he did say that the city wants to stop the "EKG effect" of rates spiking and dropping each year.

"In the next two phases, stabilization of the enterprise fund will be on the front burner, and that stabilization will include a comprehensive review of the rate structure and how to take care of and eliminate those huge bumps," he said.

One goal of the study is to assure that water and sewer services are self-supporting. In other words, rates need to cover the cost of providing sewer and water services without digging into the general fund or other tax revenue sources.

Those costs include debt service, infrastructure maintenance, capital improvements, staff and emergency reserves.

In Geneva, water usage has been dropping since about 2007, a pattern that mirrors municipalities across the country. As usage goes down, rates go up. And when there's a cool or wet summer, usage drops further, and rates need to rise quickly to compensate.

Geneva has significant debt right now due to the construction of new sewer and water plants.

Part of what Municipal & Financial Services Group will determine is how much of Geneva's rate should be a fixed charge and how much should be volume-based.

"Where we see (Geneva) really falling short is in the revenue from the fixed charge," Hyder said. "So when you have the fluctuation in demand, that wreaks havoc. That’s where we see the shortcoming currently."

Near the end of his presentation, Hyder asked aldermen a question that might have been rhetorical but might also have been a search for direction.

"Do we want to go to a rate structure that encourages people to use water more wisely?"