By Rob Ollikainen
Peninsula Daily News
CARLSBORG — The Clallam County Public Utility District went before the public Monday to discuss the reasons why it wants to raise water rates by 6 percent.
If approved, the increase becomes effective on bills sent out starting June 1. Additional 6 percent increases would take effect in January 2012 and January 2013.
No public testimony was taken in the hearing at the PUD’s Carlsborg Operations Center.
Other meetings are planned for next Monday at the Clallam Bay Library, 16990 state Highway 112, and May 16 at the PUD’s main office at 2431 E. U.S. Highway 101, Port Angeles.
Both hearings will begin at 1:30 p.m.
Commissioners are likely to vote on the proposal after the May 16 hearing.
“Currently, our water rates are insufficient to meet the future and current forecast expenses of the water system,” PUD Treasurer Josh Bunch said at Monday’s hearing in Carlsborg.
“By the third year, if we do nothing, we’re not going to meet targets. We wouldn’t have the income for capital, and we’re getting down to bare minimum on our debt coverage.”
Level lowered
A cost-of-service study suggested a 9.8 percent increase, but PUD staff whittled that down to 6 percent by deferring some projects and reallocating resources.
PUD officials say a water rate increase is needed to meet regulatory mandates, fund ongoing maintenance of aging infrastructure and meet other operational costs.
“We’re not here for profit, we’re here to cover costs,” Bunch said.
The idea behind the gradual increase is to avoid the sticker shock of a large, one-time increase.
“It’s much nicer for our customers and for the district to have a steady revenue stream of steady, smaller increases over time,” Bunch said.
If the increase is approved, a residential water customer using an average of 600 to 700 cubic feet per month would see a increase of about $2 to $4 on his or her monthly water bill.
“It could vary depending on your usage,” Bunch said.
“If you’re a little bit above the average usage, your going to see a higher than a 6 percent [increase]. If you’re below the average usage, you’re going to see a little bit lower than the 6 percent.”
Although the increase for residential customers could vary from 4 percent to 8 percent, Bunch said 95 percent of PUD water customers would see a 6 percent increase.
“For a commercial customer, it’s really going to depend on which district you’re in and how much usage you have,” he said.
Adjusted income
The PUD’s adjusted operating income is projected to be $288,216 this year and fall to $74,926 by 2013. Bunch described a “slow deterioration of financial health of the district without increases.”
With the 6 percent step ups, projected revenue would rise from $2.7 million to $2.9 million in the first year to more than $3 million in 2012 to $3.25 million in 2013, Bunch said.
“Everything’s trending in the right direction.”
More funding is needed for a comprehensive water plan update, which the state requires every six years.
The utility district is completing a new water resources project for Fairview water users. The “Bluffs Well” project for Fairview customers is the largest on the PUD’s horizon, with estimated costs of $800,000 this year and $1.5 million in each of the next two years.
Bond issue
To pay for this and other capital projects, the PUD plans to take out $4.5 million in bonds over the next two years.
“The thing to state on Bluffs Well is it’s a large project and it is the primary driver here for the borrowing, which is behind our rate increase,” Bunch said.
PUD General Manager Doug Nass said the Bluffs Well project is mandated by the state departments of Ecology and Health.
The district also is purchasing land for a new Gales Addition reservoir. The existing reservoir there is more than 60 years old, PUD spokesman Mike Howe has said.
The PUD serves about 4,300 water customers in Clallam County.
For more information, visit www.clallampud.net.
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Reporter Rob Ollikainen can be reached at 360-417-3537 or at rob.ollikainen@peninsuladailynews.com.