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2016-2017 Water & Sewer FAQ & Rates

 

2017-2018 Water, Sewer, and Storm Water Rates

Frequently Asked Questions (FAQ)

Did water, sewer and storm water rates increase?

Water, sewer and storm water rates changed for all bills where the meter read date was on or after July 1, 2017.  Water rates increased 6% from $4.36 to $4.62 for every 1,000 gallons used.  Sewer rates increased 9% from $6.74 to $7.38 for every 1,000 gallons of water used.  Storm water rates increase from $45.75/quarter/ESWU to $46.00/quarter/ESWU for water accounts in the Evergreen-Farmington Sewage Disposal District and from $59.50/quarter/ESWU to $60.00/quarter/ESWU for water accounts in the Southeast Oakland County Sewage Disposal District.   The average homeowner using 90,000 gallons per year and living on a property with an ESWU factor of 1 would see an annual increase in their water and sewer bill of $82.00-$83.00.

Why did rates increase this year?

Water and sewer rates will frequently change from year to year for different reasons.  The current year rate increases are explained below.

Water Rate

Treated Water - Birmingham purchases its water from the Southeastern Oakland County Water Authority (SOCWA) which in turn purchases the water from the Great Lakes Water Authority (GLWA).  SOCWA maintains the water mains that connect the 11 communities that make up SOCWA to GLWA’s water mains.  The cost of treated water from SOCWA increased 3% from last year.   

City maintenance costs increased approximately 3% as result of an increase in contractual services and depreciation. 

Another factor increasing the water rate is a decrease in service revenue for water installations.  Service revenue is used to offset maintenance costs.  If service revenue decreases, more of the maintenance costs must be recovered out of the water rate.  The decrease is the result of fewer installations requiring city personnel to upgrade the water lines.

Sewer Rate

The increase in the sewer rate is the result of several factors.  First, sewage disposal costs from GLWA and the Oakland County Resources Commissioner (OCWRC) increased 11%.  This is the result of a change in allocation of sewage disposal costs by GLWA and additional revenue needed by OCWRC for infrastructure repairs and improvements.  Second, city maintenance costs increased 4% mainly as a result of an increase in depreciation expense. 

Storm Water Rates

Storm water rates for the Evergreen-Farmington Sewage Disposal District and the Southeast Oakland County Sewage Disposal District will remain roughly the same as last year.

If we are using less water, shouldn’t the costs be going down too?

Yes and no.  There are some costs that have a direct relationship to the amount of water used, for example, cost of treated water.  However, there are other costs that don’t change based on the amount of water used by the City.  These costs include sewage disposal costs (GLWA switched to a fixed cost method for sewage treatment in 2014-2015), City water and sewage maintenance, billing and depreciation.

How are rates determined?

Every year, City staff develops budgets for the following fiscal year.  These budgets are used to determine projected water and sewage disposal costs.  The costs are reduced by other revenue generated by the respective systems (interest income, charges for services, etc.).  The net cost is divided by the projected number of units of water to be sold during the year to arrive at a rate per unit of water sold.   Below is a summary of the calculation for water and sewer rates for this year:

 

WATER   RATE

 

 

 

SEWER   RATE

 

Treated Water

             $2,051,400

 

Sewage Disposal

          $3,661,080

Maintenance Costs

               1,722,990

 

Maintenance Costs

               877,650

Depreciation

                  818,820

 

Depreciation

               969,180

Total Costs

            $4,593,210

 

Total Costs

          $5,507,910

Less:  Other Revenue

                (756,520)

 

Additional Capital Funding

               700,000

Net Costs

            $3,836,690

 

Less:  Other Revenue

               (81,720)

Est. Units Sold (water)

                 829,700

 

Net Costs

          $6,126,190

Rate

                     $4.62

 

Est. Units Sold (water)

               829,700

 

 

 

Rate

                    $7.38

 

 

 

 

 

 Does anyone review the rates?

Yes, the City Manager reviews the department budgets which form the basis of the respective system costs.  The budgets along with the rates are presented to the City Commission at the annual budget hearing conducted in April.  The City Commission gives feedback to the City Manager on the budgets/rates.  Any changes to the budgets/rates are presented to the City Commission at a regular schedule meeting (usually in May) where they are approved.

What is the City doing to keep rates down?

The portion of the water and sewer rate that the City controls is approximately 46% and 24% respectively.  Unfortunately, there is not much we can do about costs outside of the City’s control (GLWA charges and OCWRC charges).  We do communicate our concerns over rate increases with the various responsible agencies.   

The City is constantly reviewing the way we maintain our systems and look for efficiency gains whenever possible.  Recently, we have implemented an automated meter reading system which nearly eliminates the need for human meter reading externally or internally.  Another way the City is reducing costs is by switching newly hired employees to a defined contribution retirement and retiree health savings plan.  These new retirement benefits will keep costs lower and more predictable from year-to-year.

To help put in perspective what has happened to water and sewer rates over the past 10 years, the following chart will demonstrate where the costs have increased:

 

 

2007-2008

 

2017-2018

% Increase (Decrease)

Annual % Increase (Decrease)

Water System

 

 

 

 

     Cost of Water*

         $  1,505,000

          $  2,051,400

36%

3.6%

    City Maintenance

             1,343,830

              1,722,990

28%

2.8%

    Depreciation

                456,880

                 818,820

79%

7.9%

 

 

 

 

 

Sewer System

 

 

 

 

     Sewage Disposal*

             1,872,150

              3,661,080

96%

9.6%

     City Maintenance

                998,770

                 877,650

(12%)

(1.2%)

     Depreciation

                684,410

                 969,180

42%

4.2%

* Represents cost outside of the City’s control

As the chart above shows, the main increases in costs for the water and sewer system have come from rate setting agencies outside of the City’s control and depreciation.  The depreciation charge represents the cost recovery of assets placed into service.  Water and sewer lines are depreciated over a 40 year life expectancy.

Does Birmingham have the highest water and sewer rates?

Birmingham’s water and sewer rates are higher than many communities because of various factors:  1) we are a combined sewer /storm water sewer system, 2) our infrastructure is older, 3) smaller population, and 4) we participate in the maintenance of 3 CSO retention basins. 

Even with those factors, Birmingham’s rates are not out of line with other surrounding communities as shown for below.  The following chart illustrates an average quarterly bill for a customer using 30,000 gallons.

                       

 What can I do to lower my bill?

Residents can lower their bill by checking for leaking toilets and sinks, adjusting lawn sprinkling times and days, and purchasing water conserving shower heads and toilets.

What is an Industrial Waste Control (IWC) charge?

The Industrial Waste Control charge is an additional fixed fee charged to commercial properties by the GLWA for additional sewage treatment costs associated with commercial properties.  The fixed fee is based on the size of the water meter.  These fees are collected by the City of Birmingham and remitted to the GLWA.  The GLWA has increased this fee by .5% for 2017-2018.

Who can I call if I have additional questions?

If you have additional questions, please call the telephone numbers listed below or feel free to send an e-mail to water@bhamgov.org.

Contact List

City of Birmingham                                                                         Water Resources Commissioner

Water Department                                                                         Phone:  248-858-0958

Phone:  248-530-1830                                                                     email:  wrc@oakgov.com

Fax:  248-530-1070                                                                           website:  www.oakgov.com/drain

e-mail:  water@bhamgov.org

website:  www.bhamgov.org                    

 

Great Lakes Water Authority

Phone:  844-455-4592

email:  info@glwater.org

website:  www.glwater.org