City leaders know a utility rate will likely need to happen if infrastructure improvements are going to happen.
In Alexander City’s sewer system alone, staff with the accounting firm Jackson Thornton have made presentations the city is only receiving $44 for every $100 it spends on sewage while other city utilities are close to breaking even or showing a slight profit. It leads to the conclusion that rates, especially sewage, will increase.
“Electric, water and gas are probably not going to see a lot of change,” Alexander City Mayor Woody Baird said. “Sewer is probably going to double. If we double sewer we are still going to be at a 50% loss.”
To help with the rate study increase the city has employed Chris Cousins and Municipal Consultants to help navigate the seas of rate increases. And the city has already found places to improve issues, mainly time-saving for employees.
“We are trying to work through recategorizing,” Baird said. “We are trying to simplify our billing system. We are trying to have three categories in each utility and we have hit some obstacles.”
Baird said it has been discovered there are eight different charging categories in electric but four of them aren’t being used.
“Let's simplify this and make it easier for (finance director) Romy (Stamps) and the accounting department,” Baird said.
Baird said Municipal Consultants will look at water and sewer rates while the Alabama Municipal Electric Authority is helping with electrical rate studies.
Baird said some monies have been spent over the years on utilities but nothing of substance for water beyond some improvements to Adams Water Treatment Plant.
“There have been zero in the ground water system improvements,” councilmember Eric Brown said.
Baird said residential water customers appear to be fine but wholesale water customers will likely be different where Jackson Thornton said the city was losing 18% of the money it spent treating water for other large customers.
“There will be new contracts for all of our wholesale water customers,” Baird said. “We are probably going to up those rates a little bit across the board.”
Baird said he has already had conversations with the Alexander City Housing Authority about the issue as it’s already budgeting for the next fiscal year. Councilmembers asked about when the issue might come to the table for a decision.
“We are going to get there; middle of summer we should have rate increase advice to bring to you and see what you’re thinking,” Baird told councilmembers. “We are trying to align it with the new budget.”
The rate studies done by Jackson Thornton were done from audited fiscal year 2017 numbers based on rate increases from 2008. Baird said rate increases are not popular but the city and councilmembers will just have to chalk it up to a decision that has not been made in many years.