Water Industry News

Pennsylvania town approves 40% water rate hike

June 12, 2006

For The Patriot-News

Flushing the toilet and turning on the tap just got a lot more expensive in Penn Twp.

The Penn Twp. Municipal Authority this week approved a $60 rate increase from $150 to $210 per quarter. It also increased the base water rate from $35 to $55. The average water bill in the Perry County municipality will now be about $85 per quarter.

The rate increases are needed to keep the authority solvent as it repays loans for sewer projects, including the remainder of a $1.5 million interim financing loan from the First National Bank of Marysville due in October.

But despite the increases, the rates provide little cushion for operational costs that might arise, officials say.

The five-member authority also approved a plan to bill customers monthly instead of quarterly in hopes that bills will be easier to pay in smaller installments.

The board's action Wednesday was based on the findings of financial consultant Mark Derr, who was hired to examine the authority's finances.

"There is no question that a significant rate increase is required to pay the debt incurred to finance the projects undertaken over the past several years," Derr wrote in the report.

Things are likely to get worse before they get better, he warned. Derr projected the rates will need to increase to $220 per quarter in 2008 and 2009, and to $230 per quarter in 2010 in order to meet financial obligations.

Water rates will need to reach $90 per quarter by 2009, Derr said.

Henry Holman II, one of the authority's newest members, asked Derr, "You see no other options?"

"No, not really," Derr said. "You've got a huge debt load to pay for systems that have been built, and you don't have the number of customers to spread those costs over."

About 120 customers use public water.

"We need more customers," authority chairman Robert Shaffer said.

"I'm definitely opposed to going over the $800 limit," said authority member Franklin Reidinger. "I don't see that we should be balancing the budget on their backs."

Reidinger and Irene Graybill opposed the motion to increase rates to $210 per quarter.

"I'm being penalized for where I live," said resident Lynn Allender, who lives in the Little Boston section of Penn Twp.

"We've got other bills to pay," said Allender, who works in the trucking industry. "Some people have jobs where they can pay for all this stuff."

Attending his first municipal authority meeting, Allender suggested that everyone in the township should share the burden of the state-mandated sewer system -- not just the users.

Such a scenario could unfold should the authority default on a loan because Penn Twp., by agreement, backs the authority loans, said township Board of Supervisors Chairman Henry Holman. "I wish now I'd never signed it."

State law requires public sewer systems to be built when commercial and residential growth exceeds the ability of in-ground septic systems.

The five-member Penn Twp. Municipal Authority was set up in the early 1990s to oversee the creation of such a system. Failure to connect to the public sewer system can result in legal action against residents.

Residents of Perdix and Cove in the southern section of the township along Routes 11/15 must pay a $2,650 tapping fee to connect to the system. Residents also are required to pay for building lines to connect their houses to the system. That work costs as much as $3,000 in some cases.

Many residents also will have to upgrade their electrical systems to accommodate the grinder pumps that pump sewage up into the new lines. That work could cost hundreds, if not thousands, of dollars.

Web Water Industry News