Purcellville Eyes 4-Tier Water Rate Structure, Residential Rate Hikes

After several meetings to be briefed on the rapid decline of the town’s utility funds, the Purcellville Town Council on Monday got its first glimpse at numbers that could restore fiscal stability.

Stantec, the town’s utility rate consultant, presented the council with its proposed utility rate structure, recommending alternatives to the existing 17-tier structure that could charge water users for their consumption using fixed rates or rates based on average usage. The firm prominently recommended charging for water service based on actual use, by implementing a four-tier structure that could help the town regain control of its utility funds in two ways—more aggressively by raising rates by about 5 percent for single-family residential users or more moderately by raising rates by about 2 percent for those users. In both instances, rates for all other users would level off, be reduced or increase minimally.

Earlier this month, the council began meeting with Stantec to discuss its depleting water and sewer funds, which have shrunk by 39 and 16 percent, respectively, over the past fiscal year. In addition to diminishing utility funds, the town also faces repayment of $31 million in sewer debt and projections of $21 million worth of needed water system upgrades, all while 73 percent of the town’s annual water production is consumed by single-family residential users—which pay 86 percent less for the service than the $17.99 it costs the town to provide it.

To begin stabilizing the situation, Stantec first recommended a moderate approach that would see the town implement a four-tier water rate structure for all users in the system.

The More Moderate Plan

The 2,585 single-family accounts that use 0-7,000 gallons of water every two months would pay $8.32 per 1,000 gallons of water, or $1.66 more than what they’re paying for 0-5,000 gallons of use now. Those same users would pay $12.47 for water usage between 8,000 and 14,000 gallons, $16.63 for 15,000-20,000 gallons and $20.79 for usage exceeding 20,000 gallons.

That means the water bill for the average single-family customer—those who use 8,000 gallons of water every two months—would increase by 1.88 percent, or by $4.10 per billing cycle, totaling $84.04 for a single water bill. The majority of single-family customers would see their bills remain level or increase by anywhere from $3 to $15 per billing cycle.

Stantec Principal Dave Hyder talks to the Purcellville Town Council about his firm’s proposed utility rate structure aimed to bolster the town’s diminishing utility funds. [Patrick Szabo/Loudoun Now]

Under that same four-tier structure, non-single-family residential users would pay the same fee in each tier, meaning a majority of them would see their bills level off or increase by $3. But 56 non-single-family users would see their bills decrease, the majority of which would decrease by $27 to $33.

When looking at what those non-single-family home accounts are currently paying for water, Stantec’s four-tier structure would benefit them the most. Currently, those users are paying anywhere from $20.42 per 1,000 gallons for 100,000-150,000 gallons of usage to $57.26 per 1,000 gallons for usage exceeding 600,000 gallons. But Stantec’s proposed structure would see those users paying at most $20.79 per 1,000 gallons of usage exceeding 20,000 gallons.

The Aggressive Approach

A more aggressive rate structure would see the town implement four tiers for single-family residential users and a fixed rate for all others.

Single-family users would pay $9.20 per 1,000 gallons of use for 0-7,000 gallons, $13.81 per 1,000 gallons for 8,000-14,000 gallons, $18.41 per 1,000 gallons for 15,000-20,000 gallons and $23.01 per 1,000 gallons for usage exceeding 20,000 gallons. That would increase the average single-family user’s water bill by 5.33 percent, or by $11.60 per billing cycle, totaling $91.54 for a single water bill. The largest percentage of single-family users would see their bills increase by $9.

Non-single-family users, on the other hand, would spend $9.47 per 1,000 gallons every billing cycle no matter how much water they use. The majority of those users would see their bills increase by anywhere from $3 to $12 per billing cycle, while 17 would see no increases and 115 would see reductions, the majority of which would see their bills go down by $3 to $18.

But Stantec Principal Dave Hyder pushed the more moderate approach, noting that it would still provide the town with more revenue than the existing system, which, he said, was unsustainable. Hyder said that if the town were to retain its 17-tier system, non-residential water users would take “drastic measures” to reduce their water usage, which would further reduce the amount of revenue the town pulls in and result in a greater imbalance to the system.

When Mayor Kwasi Fraser asked which water users had already left the system, members of the town’s finance department said Loudoun Golf & Country Club and the Purcellville Dialysis Center have both done so.

After hearing all the options, Vice Mayor Tip Stinnette asked the two Stantec representatives present to develop a third alternative that would re-do the rate structure while essentially keeping rates level for all users. Stantec is expected to present those findings at a future meeting, perhaps next week.

The Town Council opted to cancel its Oct. 30 meeting to allow members time to digest the information Stantec presented. The council will call another meeting at that point to finish its discussions with the firm.

Those discussions will include a third alternative structure and talks about chargebacks—the process of bolstering one fund with another. In this case, money from the town’s general fund could be flowed to the utility funds.

pszabo@loudounnow.com

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