ALBANY — The average residential customer of Albany Municipal Water and Sewer Utility will be paying 73% more, or an additional $55 per quarter for water, as the village moves part of the fire protection charge from property tax bills to water bills to finance system improvements.
Average residential customers currently paying $75.23 quarterly for 9,000 gallons of water will pay $130.23 for the same volume when the new rates take effect June 25, said Laurie Keepers, village clerk/treasurer.
The rate increase will boost average residential water bills by 32.2%, from $75.23 to $99.48. Moving some of the public fire protection charge from property tax bills adds the balance of the increase bringing some residential quarterly bills to $130.23, according to the Public Service Commission order issued Tuesday.
Rates for multi-family, commercial, industrial and public authority customers will increase between 50.6% and 129.4% depending on customer category and usage, according to the order.
“I know it will be a big bite but we’re willing to work with people…” Keepers said. “We’ve had to make repairs to keep the system up to date and that costs money.”
Since a 35% rate increase in 2015, the village has replaced a leaky water storage device called a standpipe, and is currently repainting a water tower, updating electrical systems at two wells and replacing aging water mains. Constructing a 120,000-gallon standpipe was approved at $452,000 the project exceeded that amount due to higher than expected steel prices and additional work discovered after the bidding process was complete.
The village received a USDA loan of more than $1 million with a $600,000 principal forgiveness provision to finance the major capital projects. The result should be “a system that’s in pretty good shape, compared to what we’ve had,” Keepers said.
The village has collected about $100,000 annually on property tax bills under the Public Fire Protection charge for costs the water utility incurs associated with firefighting expenses including hydrant maintenance and increased water storage capacity. The village pays the utility for those expenses out of the property tax revenue it collects.
The costs apportioned to firefighting from the improvements to the wells, new standpipe, mains and hydrants this year totals $62,421, in addition to the $100,000 the village collects on property tax bills
Not wanting to increase property taxes to fund the system improvements attributable to firefighting costs, the village board voted to collect it through water bills, Keepers said.
Now, tax-exempt property owners, including schools and churches, will pay for more of the village’s firefighting costs on their water bills. It’s considered a more equitable way to have all water users fund firefighting costs, Keepers said.
Property taxes will not decrease because water bills are going up.
“We still the need the $100,000 for public fire protection,” Keepers said. “That isn’t going down.”
The village will soon begin to inform water customers by letter of the public fire protection charge that will be added to their water bills, she said.
The PSC granted higher rates than the utility requested. The utility asked for a 2% rate of return on the value of its infrastructure, but the PSC said that was below the rate at which the utility would borrow money and authorized a 3.5% rate of return, stating it “will provide the municipality with sufficient earnings on its investment and maintain confidence in the utility’s financial integrity,” without resulting in excessive rates.
The new rates will boost annual revenue by more than $110,000 to nearly $359,000. After estimated total expenses of more than $278,000, the utility should have a net operating income of slightly more than $80,000, according to the PSC order.
Without the new rates, the utility would have posted a negative net income of nearly $30,000.