In our recent forums, council candidates received an excellent question about our Water Master Plan directing rate increases of 4% year over year. This begs the question, how are our utility rates established and what drives the increases?
I love this question because it focuses on a critical part of the rate setting process. Our utility rates are built into the budget from our master plans. By the time the rates come forward in the budget process, the detailed work informing those rates has been completed. To find answers about what drives our utility rates we must look to our public works master plans.
Utility rates are structured to meet the goals and investments outlined in a master plan. With regard to our Water Master Plan, my understanding is the 4% rate increase is recommended based on the following objectives:
- Minimizing the need for borrowing to fund water infrastructure.
- Supporting Capital Improvement Projects through rates and SDC’s (System Development Costs).
- Addressing aged, undersized and insufficient pipes that are not large enough to meet pressure guidance, and fire flow standards.
- Meeting reservoir repair needs
- Maintaining reserves, which consist of two months of revenue, and one year of debt service in planning for unforeseen issues like emergency repair.
It is also important to note, Ashland’s fiscal calendar goes from July 1st to June 30th. Subsequently, you will see rate increases impact our utility bills beginning in the summer with the billing cycle including July 1st. This may feel a little different given that most of us look at our personal budgets on a calendar year, which clearly begins in January.
I encourage our residents to review Ashland’s master plans to better understand the details and drivers of our utility rates. With education we can ask constructive questions, educate ourselves, and our community, on rate drivers. Most importantly, we can assess the priorities outlined, provide feedback to the process, and inform the adoption of rate policies consistent with our community values and priorities. If you are curious about our utility master plans please visit the below link for detailed information.