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CBJ looks at water and wastewater rate increases

Posted: Friday, June 18, 2010

City officials are trying to figure out how to boost fees for water and water - without incurring the wrath of the public.

MICHAEL PENN
MICHAEL PENN

"Right now, all of us are a little sensitive to rate increases," said city manager Rod Swope.

Among the options considered at a joint meeting of the Special Public Works and Facilities Committee and the Utility Advisory Board were a 12 percent increase the first year with no increase the second year, and seven percent in each of the next two years.

The increase request comes at a time when the city's privately owned electric utility, Alaska Electric Light & Power, has proposed its own 22 percent increase.

Ironically, the reason for the large increase is that two years ago the city had deferred a rate hike following the Snettisham avalanche that resulted in a huge one-time increase in bills.

If a smaller increase had been done then, the city would only be looking at four percent increases in each of the next two years.

"It's ironic, here we are two years later and things aren't any better for the same reason," Swope said.

Members of the two committees Thursday evening reviewed ways to keep rates down, including other funding sources, deferring maintenance, and use of other city funds such as sales tax revenues.

Public Works Director Joe Buck said the increase sought would enable the city's utilities to remain financially stable. If the city fails to maintain its infrastructure, it will likely be unable to get additional state grants that help it keep costs down, he said.

"We believe it is time for a rate increase," said chairman Dick Behrends. "If we don't have a rate increase now and delay it, it is going to cause ramifications down the road.

"At some point the users are going to have to pay their own way. The longer we defer it, the larger the rate increase," he said.

The last rate increase to water and sewer bills was four years ago, and the city wants to make sure it doesn't get into a situation such as 2003 when after a long period without rate increases Juneau residents and businesses were hit with increases of 19 percent for water and 39 percent for sewer.

"That was a shock," said Geoff Larson, a utility board member, because the city hadn't been imposing smaller increases as costs rose.

Following that, the city decided to increase rates regularly on a two-year schedule, but skipped the 2008 increase following the avalanche.

"If we push off the rate increase, as we just did recently for political reasons, we have to pay the piper," he said.

Some Assembly members present, including Merrill Sanford, chair of the Public Works Committee, were skeptical.

"We respect the work you do," he told the Utility Advisory Board. "That's why we're willing to listen, otherwise we'd be saying 'no' automatically."

Mayor Bruce Botelho first sat in the audience but then moved to the table to caution the utility board.

"The assembly is going to get a lot of heat," he said.

It will be seen as a politician upping the rate, he said, and the utility board needs to be willing to stop forward and explain the consequences of not raising the rates.

Behrends said they can, and have, done just that. He said he's had his own employees ask why water wasn't free, and why it cost so much.

He explains it costs money to pump, treat and store water, but the public is willing to pay those costs when they know what they are paying for.

Sanford said the utility rate increase will next go to the Assembly's finance committee, and will likely take from three to six months to decide.

Contact reporter Pat Forgey at 523-2250 or patrick.forgey@juneauempire.com.



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