The head of Decatur Utilities on Monday pushed back on a councilman's complaint that residents were shouldering too much of the burden of a rate increase to finance the accelerated replacement of defective sewer pipe, saying industrial customers would see a sharp rate increase as well.
Decatur Utilities General Manager Ray Hardin told the City Council at its work session that DU leaders felt residents would pay “their fair share” with the $22 per month rate increase. The rates for those with a typical 5/8-inch meter would rise — phased in with increases of $12 a month the first year, $6 a month in the second year and $4 a month in the third year — because they make up a major percentage of the expense for providing sewer service, he said.
The rate increases are based not on the volume of water used, but are a flat fee that depends on the size of the customer's water meter. DU needs City Council approval to raise the rates.
Residential customers who get all four of their utilities from DU would see their utility bills increase from an average of $199 to $219 a month, which incorporates a $2 reduction in their electric bill.
The rate increases would pay for a $160 million bond issue the utility would need to pay for the replacement of about 1 million feet of aging, clay sewer pipes to reduce the number of sewage overflows that have been a problem in recent years. In heavy rains, storm water enters the deteriorating pipes and overwhelms capacity, causing diluted but untreated sewage to flow onto streets and into waterways. DU plans to replace about 100,000 feet a year.
Hardin said industrial customers using larger meters would also see significant increases in their bills. Those on a 6-inch meter would see their access fee — a flat cost not dependent on actual water usage — go from $575 to $5,000 a month, and those on 8-inch meters would have their rates go from $700 to $6,000 a month.
The council is expected to vote Tuesday on the proposed ordinance change.
Hardin took aim at Councilman Billy Jackson for his public statements that industries should take on more of the burden because they can more easily afford it than the city’s residents, many of whom are on fixed incomes.
“He has been vocal about it and he’s wrong about it,” Hardin said of Jackson's expressed concern that residents were carrying a disproportionate amount of the cost burden.
"We are spreading out the impact of this increase to every customer class, every meter size, as fairly as we know how to do it," Hardin said.
Hardin said Decatur Utilities has about 20,000 residential and small business customers on the smallest (5/8-inch) meters while there are only about 12 industrial customers on the largest meters.
Jackson left Monday's work session before Hardin’s presentation and could not be reached for comment.
Councilman Hunter Pepper asked why the utility couldn’t increase rates based on the amount of water used, rather than using the fixed access fees to generate revenue. Hardin said these repairs are aimed at a fixed cost that’s not impacted by the volume of sewage produced by a customer.
Hardin said increasing the rates based on volume used would also concern rating agencies, who prefer a fixed revenue stream to cover the fixed cost.
'Hair on fire'
Hardin also shot back at officials who have complained DU was not doing enough to reduce sewer overflows.
“When the big rain events happen and these (sewer overflows) start happening, it’s easy for people to talk to the newspaper and be critical and say things like, ‘DU needs to set its hair on fire fixing this,’” Hardin said. “Well, this is what having our hair on fire looks like. This is a very aggressive plan, and it's something we need to do to make a permanent repair, a permanent fix for this community.”
He said in past decades the utility had been overly reluctant to increase rates, even though such rate increases were necessary to maintain the sewer system.
"There was an unhealthy focus on having the lowest rates, the lowest cost. Times in the past where DU needed to invest in infrastructure — that meant they needed to raise rates — they chose not to," Hardin said.
The utility was on a 40-year replacement plan and the DU board last year reduced that to 20 years, but the board members didn’t think that was fast enough. Hardin said DU thought a five-year plan would be too expensive for customers and would involve too much simultaneous construction, much of it interfering with roadways.
DU is also negotiating with the Alabama Department of Environmental Management, which sued it in 2019, on a settlement that focuses on reducing sewer overflows. He said the 10-year replacement plan is more aggressive than ADEM would require.
Mayor Tab Bowling was one of the officials critical of the pace Decatur Utilities was replacing the aging sewer pipes and the amount of sewage overflows. He said Monday evening that he’s glad DU officials chose to go with the proposed 10-year plan.
“This time last year I was pretty critical of DU,” Bowling said as he called into the meeting. “But clearly this (utility) board and the department as a whole are truly responding to the needs of the community in a good and aggressive way.”
Bowling said he thinks the utility officials and board “chose a good financial plan that will have a minimal impact on its customers.”
The mayor reiterated that DU needs to communicate with the city about how and when its plans will impact city roads.
Hardin said his utility plans to use a pipe-bursting method for most sewer replacement that isn’t as disruptive and will minimize the impact on city roads as much as possible.
In the pipe-bursting method, a new high-density polyethylene pipe is inserted inside of the old clay pipe, basically replacing and destroying the old clay pipe. He said he expects the new pipe to last 50 to 70 years.
Hardin said much of the excavation will be in alleys and under streets but there will be some impact on city roads. There will also be some boring and trenching plus some manhole work, he said.
Councilman Carlton McMasters said he feels the council has no choice but to approve the rate increase so sewer repairs can be expedited.
"We've got to fix it. It's been kicked down the road too long," he said.