2022 WATER AND SEWER RATE INCREASE FAQ
The City of Southport Board of Aldermen have adopted a new water and sewer rate schedule which will be effective with the February billing. The following are frequently asked questions and answers that help to clarify the facts about the rate increases.
Q. Why do water rates need to increase?
A. Like many other municipalities, Southport purchases water from Brunswick County as a wholesale customer. Beginning January 1, 2022, Brunswick County increased the rate of wholesale water per 1000 gallons by 81.7%. The county’s rate increase is to cover the debt service for the expansion of the Northwest Water Treatment Plant and installation of the Reverse Osmosis System to address the purification of raw water sourced from the Cape Fear River.
Q. Why do sewer rates need to increase?
A. The sewer rates that were adopted previously were in response to the original $26,000,000 loan that enabled Southport to become a member in the county-wide sewer processing system with 750,000 gallons of capacity.
The current increase in rates reflects the expansion of the Brunswick County sewer processing facility in Shallotte. The cost is now $30,000,000 for Southport to become a member with 750,000 gallons of capacity.
Q. What other factors play a role in the rates increases?
A. The new rate schedule is also calculated to address much-needed infrastructure needs. The City now has Water and Sewer Infrastructure Inventory Analysis reports that articulate needed Capital Improvement projects, estimated at over $5,000,000 for water and over $7,000,000 sewer over the next 5 years. The new rate schedule includes $750,000 in revenue annually to begin to address these needed improvements.
The new rate structure also includes $250,000 in reserves annually to address the unforeseen so that we can hopefully stay on track with the critically needed Capital Improvements.
The City has applied for alternative funding sources – like an eight million dollar USDA grant. Without approval in hand, we must plan as if it doesn’t exist. Regardless, in the near term, the City must demonstrate to the Local Government Commission that the Southport rate structure will support the debt service for the $30,000,000 low-interest loan and continued operation.
Q. How were the 2022 water and sewer rates determined?
A. The new rate structure is based on data calculated by the dashboard rate tool provided by the NC School of Government Environmental Finance Center. This tool creates a 20-year rate projection that factors in volume metrics, increased cost of wholesale water, debt service, capital improvements, revenues and expenditures.
The data was gathered by Finance Director Melanie Trexler and her staff, using April 2021 as a snapshot of an average month’s usage. The new rate structure projections include an annual 5% increase for the next two years and after that, an annual 2% increase like the previous rate structure.
The Rate Committee and the Finance Director will meet quarterly to monitor the results of the new water and sewer rate structure to ensure that revenues are in alinement with budgeted expenditures, debt service and required capital improvements.
Q. How does the water rate structure differ from the previous rate structure?
A. The previous water rate structure included 3000 gallons of usage in the base rate with two-tiered pricing per 1000 gallons; for the usage of 3001 to 10,000 gallons and beyond 10,001 gallons.
The new water rate structure for residential and commercial users provides for the base rate to remain the same, however, the number of gallons included in the base rate has been reduced to 1000 gallons.
Beyond the base rate, there is now a three-tiered rate structure. The first tier is 1001 to 3000 gallons, the second tier is 3001 to 5000 gallons and the third tier is 5001 gallons and beyond. By maintaining a base rate with some usage included, we have more stability and seasonal users help to contribute towards the resources that must be standing by and available to them.
Bills are calculated using the base rate, plus the rate per 1000 gallons used.
Q. How does the sewer rate structure differ from the previous rate structure?
A. The previous sewer rate structure included 3000 gallons of usage in the base rate, with single-tier pricing per 1000 gallons for usage over 3001 gallons.
The new sewer rate structure for city residential and commercial accounts provides for the base rate to increase by $4 and $10 respectively.
The non-city commercial base rate increase is $15 and the non-city residential sewer rate remains the same. However, the number of gallons included in the base rate has been reduced to 1000 gallons. There is now a two-tiered rate structure. The first tier is 1001 to 5000 gallons, the second tier is 5001 gallons and beyond.
Bills are calculated using the base rate, plus the rate per 1000 gallons used. By maintaining a base rate with some usage included, we have more stability and seasonal users help to contribute towards the resources that must be standing by and available to them.
Starting February 2022, city residential households that do not exceed the 1000 gallons of usage included in the base rate, will have an increase of four dollars ($4) in their total monthly water and sewer billing.
Q. Why did city irrigation rates increase more than city residential water rates?
A. Irrigating yards is a choice, and supplying water to homes is a requirement.
Using the volume metric data from April 2021, as an average month, revealed that irrigation utilized 61.4% of the volume of water that homes used during that same period.
The city recently had to increase water reserves by 230,000 gallons at a cost of almost one million dollars to be paid over a nine-year period. This expense was based on future water usage and DEQ requirements. The more we conserve, the less infrastructure we will have to create and maintain.
Q. Can the City use monies in the water/sewer fund for unrelated water and sewer expenditures?
A. Southport has two enterprise funds, a water/sewer enterprise fund, and an electric enterprise fund.
No…Enterprise fund money can only be spent on a specific purpose, such as water/sewer or electric-related spending. The funding comes from fees related to the fund’s mission. An enterprise fund is a separate accounting and financial reporting mechanism for which revenues and expenditures are segregated into a fund with financial statements separate from all other governmental activities.
Q. What are our water and sewer utility service goals?
A. The City is waiting for grant approval to fund a merger analysis with Brunswick County Water/Sewer Utility System.
The purpose of this grant is to provide funding for an analysis based on our Water and Sewer Infrastructure Inventory Analysis reports and Brunswick County’s requirements for assuming our water and sewer infrastructure. This will help us design a Capital Improvement Plan that will facilitate a merger with the county.
In North Carolina, the trend is for municipalities to merge with County operated water/sewer utilities. This helps communities to take advantage of economies of scale which will result in lower rates.
Q. When will I see this increase on my bill?
A. The rate increases are effective with the February 2022 billing. They will be reflected on the February utility bill, which you will receive in early March.
The bill that you receive in February reflects the previous month’s usage and rates (January) prior to the increase.
Q. What resources are available for those that need assistance with their utility bills?
A. There are two programs available to residents that qualify:
- NCDHHS Low Income Household Water Assistance Program: The State of North Carolina has been awarded more than $38 million in federal funding to establish a new water assistance program for households affected by the COVID-19 pandemic. Eligible households that have had their water services cut off or have received notice that their water services are in danger of being cut off can apply for assistance in paying their bill through a new federal program called the Low-Income Household Water Assistance Program (LIHWAP). Click here for more details.
- Neighbors 4 Neighbors: This program, specifically for Southport residents, was established by the Board of Aldermen to assist citizens struggling to pay sewer bills. If you need assistance, please contact Brunswick Family Assistance (BFA) at 910-754-4766 to see if you qualify. In addition, an Intake Specialist with BFA will be available in Southport at Trinity United Methodist Church, 209 E Nash St. Please call BFA for the schedule.