BERLIN- Water rates could go up for Berlin water customers next year to handle capital and operations costs, a consultant told the Berlin Town Council this week.
The town recently separated water revenue into two accounts, operating and maintenance and capital expenses. Both accounts are projected to suffer losses in the current fiscal year.
“Your annual users’ rates and your ready-to-serve charges have to cover all your operating and maintenance expenses,” said consultant Russ Tatman of URS Corp.
The water fund also owes the Berlin General Fund $1.3 million. The fund owes $1.1 million of that amount after the general fund was tapped to pay off a water fund loan in 2006.
The other $200,000 comes from advances for operating expenses from the general fund to the water fund. This amount should increase, given the expected shortfall in the operating and maintenance account for the current year, according to the consultant.
Tatman advised forgiving the debt the water fund owes to the general fund. Paying that amount back would require a 90 percent increase in user fees over the next three years. He also advised immediately increasing funds in the operating and maintenance account to provide a reserve.
“We would need to raise the water rates 12 percent the next year and seven percent the following fiscal year,” Tatman said. “That gets us onto the road of positive cash flow.”
In the third year, user fees would go up another two percent.
“In terms of the actual dollars per month, it is not a major, major impact,” Tatman said.
Costly work for major repairs comes out of the water fund operating and maintenance account, not the capital account, Tatman pointed out. The expenses for the water fund operating and maintenance account would be budgeted for a 4.5 percent increase each of the next few years under this plan.
Rates are currently graduated based on water amount used. A change to a fixed-rate system would increase the cost to the largest users by $11 a month, which would be too much, Tatman advised. The recommended changes would increase costs to consumers by less than $4 a month.
Special connection fees will go straight into the capital account. Grandfathered fees, assessed on properties with a history of ready-to-serve fees being paid, would be $3,600, the same as the current fee. Otherwise, the special connection fee would be $4,425. Both rates must be paid in addition to the corresponding sewer connection fees, of $8,338 for grandfathered properties, which have been paying ready to serve fees, and $12,261 for all others.