The general manager of the James City Service Authority has called for rate increases that would about double the monthly bill for the average residential customer by 2025.
The increased rates are necessary for several reasons, according to a study from Burton & Associates, a firm hired by JCSA to analyze its rates. Customers are using less water due to better appliances and stricter building codes. Maintenance costs for aging water and sewer infrastructure are growing. Precipitation levels have climbed, lessening the need for water to irrigate lawns.
These factors will cause JCSA’s reserve funding, which is used to meet infrastructure costs and to preserve its credit rating, to begin to dwindle in the coming years. That reserve funding will meet a minimum acceptable level — six months of operating and maintenance costs in the bank — by 2019, according to Andrew Burnham, a senior vice president with Burton & Associates.
Burnham’s study calls for a rate increase that would be implemented over the next 10 years, with the average residential bill climbing each year by $2 to $3 per month until 2021. From then until 2025, the rate would climb each year by about $1.25 per month.
In total, the proposed rate increases would take the average residential customer’s bill from $55.95 to $103.45 per month by 2025. JCSA General Manager Doug Powell agrees with Burnham’s proposed rate increases.
“These recommendations are a proactive attempt to plan for the future based off the best information we have today,” Powell told the James City County Board of Supervisors at a work session Tuesday.
Burnham’s study also suggests implementing a fee for service even if no services are used. The study shows 86 percent of water costs and 95 percent of sewer costs are fixed, yet the amount of money the utility collects each month is variable. Most other utilities charge the fee, which is known as a readiness to serve charge. Should the supervisors put the plan in action starting next year, that charge would be $4.29 per month.
The rate increase factors in both needed money to maintain JCSA operations and planned rate increases by Hampton Roads Sanitation District, which provides sewer treatment services to JCSA. HRSD rates are outside the county’s control, and those increases represent $29.09 of the $47.50 increase by 2025 called for in Burnham’s study.
James City County Administrator Bryan Hill told the supervisors — who also comprise JCSA’s board of directors — that he thinks the Burton & Associates proposal is good and he has gone over the numbers behind it to look for any potential savings.
Burnham said postponing the cost increases to a year in the future could create a situation where customers are hit with double-digit rate increases two or three years in a row.
JCSA customers currently pay about the lowest rates out of anyone in Hampton Roads. Currently only the City of Williamsburg’s customers pay less for water and sewer service. The gulf between James City County and Hampton, which has the next highest rate at $75.84, is more than $20. New Kent County customers pay the most on average at $135.73.
The proposal from Burton & Associates is not fixed. Each year, the supervisors will be able to analyze a potential rate increase before it is put into effect.
Supervisor John McGlennon (Roberts) said the current JCSA rate system was built on the assumption that costs could be handled with future growth, saying that “can’t be the way we look at it anymore.”
“The recommendation you’ve made has a lot of sense to it,” he said of the Burton & Associates proposal.
JCSA may also need to shell out money for water from Newport News if the Virginia Department of Environmental Quality slashes the amount of water the county can withdraw from the ground in the coming years. The utility has agreed to a partnership to purchase water from Newport News Waterworks, though that has not yet happened.
During the conversation of potential rate changes, Supervisor Jim Kennedy (Stonehouse) asked Powell to explore replacing the current tiered system of pricing with a flat rate. Residential customers pay more if they use more water, however the lowest priced tier contains more than 97 percent of all JCSA customers. Commercial and industrial customers already pay a flat fee.