Bayfield is trying to fix errors in its water rate study, the basis of household utility rates, and the end result might mean higher rates for community members.
Water rates pay for every aspect of the town’s water system, including repairs, staffing and upgrades. The current rate structure is based on a 2018 study, which was meant to inform water rates for several years. But some financial figures were double-counted, underestimated or just don’t add up, said Katie Sickles, town manager.
“With the engineer’s input, we’ll go back to the information provided for the study and analyze the appropriate rate,” Sickles said.
The town’s actual water sales kept coming in lower than projected sales. That’s likely because revenue sources were double-counted, pushing projections higher than necessary, she said.
The study projected that some legal and engineering fees, like those tied to the town’s conversion of irrigation water to municipal water, would wrap up by 2020. Those fees are ongoing, she said.
The insurance bill on the town’s water assets seemed to be unduly low in 2016, Sickles said. The study indicated a payment of $5,094 in 2016, compared with the real insurance cost of $27,325 in 2020 – a 536% increase in four years.
“I don’t know why it was so underevaluated,” Sickles said.
As soon as Bayfield has a modified rate study based on correct numbers, the Bayfield Board of Trustees will be advised again. With the board’s guidance, the town will take another look at its charges for customers.
The final rates can’t be determined until the re-evaluation is finished, but in one scenario, the water rates could increase from $28.88 to $40, a difference of $11.12, Sickles said.
The monthly sewer tap fee could increase from $54.20 to $59. The increase would help pay to improve flow through water lines, address capacity issues and delay expensive sewer facility expansion in the future. Garbage rates could rise from $12.64 to $13.90 to pay for administrative expenses.
“These are just hypothetical until we finish the review,” Sickles said.
The board aims to reconsider the rates before the end of 2020; however, no rates would change until March 2021, she said.
Bayfield also plans to create a utility-relief program for anyone struggling to pay their utility bills, particularly because of the economic impacts of the coronavirus pandemic.
“The town and the board understand this is a difficult conversation with utility customers,” Sickles said. “We’re going to do the best we can to look out for the future, the water needs of the town and promoting growth. But we also need to look at the cost to our utility users.”
smullane@durangoherald.com
