Correction to Water and Sewer Rate Increases

Alan Cilley asked me to correct figures I published in the posting on Water and Sewer Rate increases. Alan said that the department estimates that it will have to spend $2.5 million in equipment and projects over the next 10 years. It will cost $900,000 to clean the lagoons in 10 years. There are $530,000 in equipment replacement in projects for water and $1.07 million for sewer over the next 5 years. I had been following the discussions, but my understanding was that the department $2.5 million in equipment replacement and projects over the next 5 years, and $1 million to clean the lagoons in 10 years. The paragraph that I wrote should read as follows The correction appears in bold type.

Another question is how does the commission determine profit and losses? Is the profit or loss determined by taking the revenues and subtracting the operating costs. Or, are equipment replacement costs also figured in? If the estimates of the current short fall do not include anticipated replacement costs, then raising the rates will not actually cover the department's losses. Utility Partners has estimated that the department will have to replace $2.5 million dollars worth of equipment over the next 5 years. If $530,000 of that is for replacing water equipment and doing projects, then the department should be figuring approximately $106,000 per year into its rates in addition to its normal operating costs.

I might also add that the department would need to put away $90,000 per year over a 10-year period to clean the lagoons, and $214,000 per year over a 5-year period for sewer related equipment and projects.