Utility rate hike next year may be bigger than anticipated

Oak Harbor residents will need to foot the bill for rising costs of sewage plant, garbage service

Oak Harbor residents won’t see a utility rate hike this year, but bills will have to increase beginning next year to pay for mounting costs at the sewage treatment plant and the county’s solid waste facility.

After delaying a decision on utility rate adjustments multiple times this year to ease the burden on residents during the pandemic, city council members this week heard the final recommendation for how much to increase billing rates before council members adopt the final rate in October.

The recommendation is slightly higher than what council members had seen previously, explained Shawn Koorn of HDR Inc., partially due to the decision not to adjust rates in 2020, as well as increasing costs at the city’s sewage treatment facility and at the county solid waste facility.

Each utility used some of the available reserves to offset rate increases.

The presented rates were similar to what the council had seen before, Koorn said, except there were two options for the wastewater rate increase.

Under the the first rate proposal, the amount that residents pay for the city to clean their sewage would increase by 14.5 percent in 2021, 7 percent in 2022, and 2 percent in the years thereafter.

Alternatively, the council could choose to increase rates by 10.5 percent in 2021, 7.5 percent in 2022, 6 percent in 2023, and 2 percent thereafter. The second option uses money from the city’s reserves in 2021 to smooth out the rate hikes.

“We always had a pinch point about this time in those sewer/wastewater rate studies,” Koorn said, referring to rate projections from years ago.

The average single-family home spent just over $100 per month for sewage service this year, Koorn estimated; that would increase to $130 per month in the year 2024.

Utilities like the water rate and storm drain rates can wait a year or two to see any adjustments, Koorn said. However, the rate the city charges for both wastewater and solid waste needs to increase in 2021 because of rising operational costs.

If the rate increases for each of the city’s utilities — water, wastewater, storm drain and solid waste — are combined, the average single-family monthly bill would increase by 9.1 percent in 2021, Koorn projected in the proposed case (which did not include an increase this year). Rates would continue to increase each year, but by smaller and smaller amounts.

In the base case, which would have included an increase this year, the combined utility rate would have increased more than 6 percent each year in 2020-22, with smaller bumps in 2023 and 2024.

Several council members said they favor using reserve funds to offset sharp rate increases.

“A lot of people young and old are hurting right now,” Councilmember Jeff Mack said in a sentiment that was shared by others. “I could support something by using the reserves up front. I know it’s going to be a little increase, but hopefully everybody will be in better economic and financial positions in ’23 and ’24 to absorb the extra increase.”

The council is slated to adopt the final rates at the Oct. 20 meeting.

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