Plan includes $12.9 million bond; rate increase to take effect July 1.
By Dan Schroeder
In a work session that ran until nearly 11:00 pm, the Ogden City Council informally agreed last night to the outline of a financial plan and rate structure for the city’s water utility.
Among the major capital improvements proposed for the water system, the council chose to proceed with replacement of the Ogden Canyon filter plant in 2014, at a cost of $13.1 million. However, the council chose to postpone several pipe replacement projects. This change to the administration’s schedule reduces the proposed bond from $20 million to $12.9 million.
The council did not consider any reductions in the Water Department’s operating costs, which have increased by more than $3 million since 2007. Nor did the council consider drawing on any of the water fund’s $6 million cash balance.
Under the tentative proposal, the Water Department’s revenue is supposed to increase by 29% over the next four years. After that there would be only cost-of-living increases, according to the plan.
The proposed rate structure, however, appears to incorporate larger first-year rate increases, for nearly all customers, than would be needed to generate the required revenue. For residential customers, the average additional increase would be about 5.3%. I pointed out this discrepancy in an email to all the decision makers over the weekend, but nobody brought it up during the work session.
Not all customers will see the same rate increase. The council chose to raise rates by a higher percentage for customers who use less water, and by a lower percentage for customers who use more water.
An ordinance to codify the rate increase will be drafted during the next two weeks and presented to the council at its meeting on May 1. A public hearing will then be held on May 15. It is difficult, though not impossible, for the council to amend the ordinance after the hearing.
The new water rates are scheduled to take effect on July 1.
