Proposed $42 Increase in Average Home Water and Sewer Bills

The average Melrose homeowner, based on average water and sewer use, would see a $42.50 increase in their water and sewer bill next year, under proposed rates currently before the Melrose Board of Aldermen.

That increase, a 4.6 percent bump over the current average bill, results from the proposed water and sewer rates for next year that were . The public hearing will reconvene on Monday, June 18.

Below is the memo/presentation by John Scenna, assistant superintendent and , given to the aldermen at Thursday night's Appropriations Committee meeting.

Editor's note: A Melrose Patch reporter was not present at Thursday's Appropriations Committee meeting. The following memo was provided to Melrose Patch by the Mayor's Office.

MEMORANDUM

To: Board of Alderman

From: John V. Scenna, Assistant Superintendent, Department of Public Works

cc. Mayor Robert Dolan; Patrick Dello Russo, City Auditor & CFO; Art Flavin, Treasurer; Robert Beshara, P.E., City Engineer & Superintendent; Ann Waitt, Business Manager, Public Works

Date:   June 7, 2012

Re: BOA Order FY13 Water & Sewer Budget Information

As follow up to our brief discussion on Monday evening at the Public Hearing for proposed FY13 water and sewer rates, we offer the following information on a few subject matters outside of the budget which can provide you with a better understanding of the various issues which surround setting the respective rates.

CONSUMPTION: The water and sewer enterprise budgets are consumption (or volume) driven businesses. Operating budgets are set based on projected direct expenses, salaries, indirect expenses, debt and payments owed to the MWRA for both the purchase of water from and disposal of waste water into their systems. Consumption is studied on annual averages and past consumer usage. Both Melrose and the MWRA system as a whole have recently experienced significant reduction in usage. The charts below show the most recent trends over the past years.

(See attached photos for charts: Actual Water Usage versus MWRA Assessments; MWRA Water Supplied; and Melrose Water Consumption.)

Costs, especially those owed to the MWRA, associated with operating these enterprise systems unfortunately do not decrease from year to year. However, when consumption and the amount of water available to bill is lower than both past history and projections, rates have to be increased or reserves have to be applied to make up the difference in revenue required and lacking. We are not alone in dealing with the issue of lower consumption. According to statistics released in the MWRA 2011 Annual Rate Survey Study, 29 of the 60 MWRA communities reported a shortfall in revenue due to lower than projected water use.

HOW DO WE COMPARE?

Once again, according to statistics obtained from the 2011 MWRA Rate Survey Study when comparing average annual household residential rate increases over time, Melrose is at par or below our neighboring communities. See the information obtained below.

Information from MWRA Retail Rate Survey & Internal Public Works Survey

MELROSE

Annual Cost

AWWA Standard for Historical Date

(120 HCF == 90,000 gallons)

Water: $630.00

Sewer: $1,009.80

Total: $1,639.80

Second Meters: Yes*

Senior Discount: Yes 10%

Minimum Billing: No

READING

Annual Cost

AWWA Standard for Historical Date

(120 HCF == 90,000 gallons)

Water: $992.40

Sewer: $1,028.40

Total: $2,020.80

Second Meters: No Longer Offered*

Senior Discount: No

Minimum Billing: Yes, 200 cf

WAKEFIELD

Annual Cost

AWWA Standard for Historical Date

(120 HCF == 90,000 gallons)

Water: $540.00

Sewer: $1,067.04

Total: $1,607.04

Second Meters: Moratorium in Place*

Senior Discount: No

Minimum Billing: No

STONEHAM

Annual Cost

AWWA Standard for Historical Date

(120 HCF == 90,000 gallons)

Water: $528.00

Sewer: $1,080.00

Total: $1,608.00

Second Meters: Program Stopped 7/1/12*

Senior Discount: $50 one time abatement

Minimum Billing: No

*only 33 (55%) of MWRA communities utilize 2nd meters to adjust water bills

BREAKDOWN OF THE BUDGET

Although large in monetary value, the operating budgets of both enterprises account for only 10% of the overall sewer budget and 30% of the overall water operating budget. Twenty Four (24) MWRA communities operate budgets in which the MWRA assessment accounts for between 50-75% of their total expenditures.

FY13 Water

FY13 Sewer

Proposed

%

Proposed

%

Salary & Wages

$762,168.08

16.53%

$389,976.97

5.90%

MWRA

$2,409,329.00

52.26%

$5,498,815.00

83.25%

Contractual Expenses

$385,258.00

8.36%

$199,758.00

3.02%

Supplies

$211,050.00

4.58%

$65,900.00

1.00%

Professional Development

$3,000.00

0.07%

$1,800.00

0.03%

Debt

$839,749.06

18.21%

$448,922.78

6.80%

total:

$4,610,554.14

$6,605,172.75

IMPACT OF PROPOSED FY13 RATE INCREASES TO AVERAGE RESIDENTIAL BILL

Avg Water Use in HCF (Hundred Cubic Feet) 1 HCF = 7.48 Gallons

Water - Residential: 68

Sewer (90% Water Use): 62

FY 2012

PROP FY 2013

Cost/Unit

Total Cost

Cost/Unit

Total Cost

Water - Residential

$5.25

$357.00

$5.65

$384.20

Sewer(@ 905 of Water Use)

$9.35

$572.22

$9.60

$587.52

Estimated Residential Water & Sewer Bill

$929.22

$971.72

% Increase in Water/Sewer Bill

3.3%

4.6%

Billing Usage is based on Historical Average per Residential Unit