Rochester Hills City Council on Monday, May 21, unanimously approved increasing monthly water and sewer rates by about 2.8 percent for the average residential water and sewer customer.
Rochester Hills Chief Financial Officer Joe Snyder said the city's water and sewer technical review committee met and discussed several rate scenarios for water and sewer rates based on rate change notifications received by water and sewer service providers.
Snyder said the committee employed a break-even methodology to determine the rates. That methodology is based on covering operating expenses. He said capital and lateral revenue aren't considered operating revenue and isn't utilized to offset operating expenses. Those funds are set aside in the water and sewer capital fund to fund future capital projects. The proposed rates assume that future capital improvement projects will be accomplished and reported in the capital improvement plan using the water and sewer capital fund.
The committee decided to look at rates using a multi-year approach, rather than to adjust for a straight pass through or holding rates at current levels.
Under the proposed rates, the water rate would increase by .5 percent, or $5.84 per 100 cubic feet; sewer rates would increase about 4.8 percent, or to $6.09 per 100 cubic feet. The customer charge, or the amount that is charged for servicing customers, meter replacements, billing, meter reading and other services, will increase about 1.8 percent under the proposed rates, for a 10-cent increase, from about $5.54 per bill to $5.64.
Non-metered, flat sewer rates are proposed at $73.08 per bill, a 4.8 percent increase. Industrial high surcharge rates from the Great Lakes Water Authority will continue to be pass through fees to industrial customers, with a proposed increase of about .2 percent; non-residential (industrial) surcharge (waste control) rates are also a pass through charge, which are decreasing by an average of 37 percent.
Overall, the average residential customer will see their water and sewer bill go from about $144.98 to $148.77, $3.79 per month, or 2.6 percent. Flat rate sewer customers will see increases from about $72.49 per bill to $75.90, $3.41 per bill, or a 4.7 percent increase.
In addition to the sewer rates, council approved the first reading of an ordinance to increase the late fee for delinquent water and sewer bills.
Snyder said the city surveyed 10 surrounding communities and found late fees ranged from five to 10 percent. Rochester Hills currently charges two percent of the outstanding bill as a late penalty. Council approved increasing that penalty to five percent.
Councilwoman Jenny McCardell said she didn't feel the city should impose an increased late fee, as many residents are already struggling to pay increasing bills. "If we can help by not adding more to their plate, then we should do that," she said.
Snyder said customers have the ability to work with the finance department for bill payment options, and that the department has the authority to waive late fees under some conditions.
Under the proposed ordinance, late fees could be waived by the city when customers sign up for an automatic bill payment option through their bank.
Both of the proposals – the rate increases and the proposed late fees – are part of the city's ordinance process, meaning the ordinance introduction was the first in a two-part step to approve the measures. The proposals will come before city council a second time at its June 4 meeting for final consideration.