As Star Valley’s staff rushes to finish taking over the local water company early next year, the council is busy deciding on a rate structure.
The town plans to boost water rates roughly 20 percent. It has been 10 years since some 360 water customers have seen a rate increase under Brooke Utilities, but the private water company also hasn’t maintained and upgraded the system in that time, town officials say.
At a recent town meeting, the council stood behind plans to raise rates, claiming the town would offer better customer service and infrastructure.
“No one wants to see water rates go up,” said Tim Grier, town manager and attorney. “However, there must be a careful look at rates to determine if existing rates will support the investment that is critical to improve the reliability of the water system.”
While the current water system is in good shape and the town has received few customer complaints, the aging system still needs an upgrade, Grier said.
Most customers will see their base monthly service charge increase from $16 to $18.50. Add in additional taxes, a commodity fee for 5,000 gallons of water and a transaction fee and most water bills will hover around $33.
The town is not trying to make money off the system and will put any revenue back into it, Grier added.
Grier admits the town could keep the current rates in place and break even, but that would mean no improvements.
“If you decide to keep the water rates where they are now, you are not going to have any leftover money to put back into the system for those big projects,” Grier said. “That is the big difference you have to consider. If you keep them where they are, yes maybe you can run the water company as it was — but I think a bit better because of the offer at town hall — but you are not going to fund that capital project fund.”
Capital projects include new soft start motors, monitoring devices that streamline meter reading and many more, Councilor Vern Leis said.
Profits that once went into Brooke’s pocket will now be put back into “the citizens’ water company,” Grier said.
Data released from Brooke shows the company’s revenue from the system in 2009 was $133,000, $123,000 in 2010 and $100,000 for the first nine months of 2011 based on current rates.
Based on those numbers, Star Valley projects 2010 revenues between $125,000 and $130,000.
With that money, the town can beef up the system and take care of maintenance issues that need addressing now, like changing out old meters, the council agreed.
“What that will do, if managed correctly, and I am absolutely sure we can, will put just enough money into our capital to be able to go forward and do some of the things we have to do,” Leis said.
“One, replace the meters; two, maintenance of the facilities, which hasn’t been done since (Brooke President Robert) Hardcastle took the system over and maybe have a little money left over to actually put into capital improvements.”
The town is already planning for several expenditures including removing depleted equipment, replacing some 375 meters and painting a 40,000- and 10,000-gallon tank.
This should run about $60,000.
It is important to change meters older than seven years because they may not read accurately and the town could lose money, Leis said.
Leis said the proposed rate structure is on par with 18 other water rate structures from throughout the state.
“If you take 10 years of increases that you could have had as a result of inflation, then these rates are very, very, very competitive and they are not exorbitant nor are they gouging,” he said. “The rates are constructed fairly.”
No citizens spoke out against the rate increase at Tuesday’s council meeting.
The council will likely adopt the rate structure at the next council meeting in January, Leis said.
“What was once profits for a private water company becomes money that is put back into your water company,” Grier said.
“In other words, now all the money that is paid by the water user stays in and is reinvested in the water company to provide better service and a more reliable infrastructure.”
The town is paying Brooke $775,000 for the water company and expects to put another $100,000 toward start-up costs.
The town is planning to hire a water operator at a cost of $43,500 and pay Chancy Nutt, the town’s finance administrator, an additional $7,000 for customer support and billing duties.
The town is planning to write a check for the company using money out of the general and rainy day funds.
Purchasing the water company will take a lot of money out of the town’s budget, but all citizens will benefit from its purchase, Grier said.
With the water company comes the release of the Certificate of Convenience and Necessity (CC&N).
“The significance of this is that now the town may supply and distribute water and pursue additional water sources such as surface water from the Blue Ridge Reservoir and ground water by the acquisition of wells.”
Securing a reliable water source has always been the goal of the town. The town incorporated in 2007 to protect groundwater from Payson’s Tower Well.
“The acquisition of the water company is a turning point for the Town of Star Valley,” Grier said.
“The compass is now set … we can now continue toward the goal of securing a sustainable water supply for future generations.”