Analyst Advises Berlin Utility Rate Hikes Needed To Avoid Deficits

Analyst Advises Berlin Utility Rate Hikes Needed To Avoid Deficits
Photo by Chris Parypa

BERLIN – A projection of water and sewer costs and revenues shows the town will have to increase rates to avoid deficits in the coming years.

On Monday, Jean Holloway of the Southeast Rural Community Assistance Project Inc. (SERCAP) presented elected officials in Berlin with a review of financial projections for the town’s water and sewer utilities. Holloway said changes needed to occur in order for the utilities to be sustainable.

“You definitely need to go up on rates across the board,” Holloway said.

Holloway, who first talked with town leaders in 2019, said SERCAP provided its services for free to rural communities with fewer than 10,000 residents. Though she was initially planning to do a rate study for Berlin, after speaking to town staff she opted to start with financial projections.

Holloway said before considering a rate increase, the town needed to do three things—get a handle on collections, reduce gallons included in the minimum bill and get a handle on non-revenue water.

“Sometimes when you hear about non-revenue water, water loss, it seems like just numbers but I’m trying to translate that into dollars to give you an idea of the impact of that,” she said.

Holloway said systems should not have more than 10% non-revenue water. Berlin currently has 25% non-revenue water. She said that during an 11-month period, the town produced 147,676,489 gallons and billed for 110,533,996 gallons, which resulted in more than 37 million lost gallons. She said that equated to $157,482 in lost water revenue and $252,565 in lost sewer revenue.

“The number one culprit when there’s a gap that wide is the age of your meters and that your meters are under-registering,” she said.

Holloway said 70% of the town’s meters were 30 years old even though the life of a meter is typically 10-15 years. She said other sources of water loss, such as leaks and unauthorized use, were hard to determine if meters weren’t accurate.

She said the money being lost from non-revenue water could be used to cover some of the deficit the water utility is projected to have going forward.

While the water utility’s deficit is expected to increase in the next few years, Holloway said the sewer utility was already at the height of its deficit. Holloway pointed out that a third of the sewer utility’s costs went to debt service.

In conclusion, Holloway said the town needed to plan on raising rates. She said that a complete rate study should be done and the town should come up with a plan to replace its old water meters.

In the long-term, Holloway suggested the town create an operations plan that looks toward sustainability of the two utilities.

“They’re not sustainable under the present circumstances,” she said.

As for new water meters, Holloway said SERCAP could help the town look for funding assistance.

“My recommendation is to come up with a plan at this point, not that you have to do it tomorrow,” she said. “I preach the gloom and doom to make an impression of how significant these losses are. The sooner you can address it the better.”

Finance Director Natalie Saleh said the town had been looking into purchasing new water meters for the last seven years but didn’t have the funding.

“We have a clear picture of what needs to be done but how to get there is the problem,” she said.

Officials thanked Holloway for the presentation and said they planned to discuss the potential for a full rate study in January.

About The Author: Charlene Sharpe

Alternative Text

Charlene Sharpe has been with The Dispatch since 2014. A graduate of Stephen Decatur High School and the University of Richmond, she spent seven years with the Delmarva Media Group before joining the team at The Dispatch.