The OWASA Board of Directors will consider the proposed budget for 2009-2010, which includes water rate increases, during a meeting Thursday.  

The proposed rate increases would go into effect on Oct. 1. The Board will meet at 7 p.m. in the Community Room at the OWASA Administration Building, 400 Jones Ferry Road, Carrboro.

The OWASA Board held public hearings on May 28th and received comments from 11 customers regarding the proposed budget, rate increase, OWASA's increasing block water rate structure, lake recreation, capital spending and odor elimination at the Mason Farm Wastewater Treatment Plant. Additional customers made comments by e-mail and in letters.

A recording of the May 28 Board meeting including the public hearings will be broadcast on Wednesday, June 10 at 7 p.m. on channel 18 of the local cable system. (Because of technical difficulty, the hearings were not televised live on May 28.)

Summary of the proposed budget and rates

The proposed budget includes $18.5 million for operating costs, $9.7 million for debt payments on bonds issued to help pay for capital projects, and $5.7 million for capital improvements such as replacement and renovation of water and sewer lines.

A 9.75 percent increase in monthly water and sewer charges is proposed. For a typical residential customer using 5,000 gallons per month, the bill would rise $6.68, from $68.24 to $74.92.

In accord with the OWASA Board's direction on May 28th, the budget prepared for consideration on June 11th does not include pay increases for OWASA employees.

OWASA is a non-profit agency and its rates reflect the costs of various services.

Reasons for the proposed 9.75 percent increase in monthly water and sewer rates

· OWASA projects that due to continuing conservation by customers and the use of reclaimed water by the University, water use in fiscal year (FY) 2010 will be 19% below 2001 demand although the number of customers has increased by 3,100 (15%).

OWASA projects that FY 2010 water demand will average 6.5 million gallons per day (MGD), about 9% less than the 7.1 MGD projected for the current year (FY 2009). The main reason for the reduction is the University's plans to use about 660,000 gallons per day of reclaimed water instead of drinking water in chiller plants and to irrigate athletic fields. Reclaimed water is highly treated wastewater. (The University funded construction of the reclaimed water system and will pay the full cost of reclaimed water service it receives.)

All forms of conservation, including reclaimed water use, affect utility revenues.

· Connection fees from development will continue to be low due to the slow construction economy. The number of new connections to the OWASA system in FY 2010 is expected to be 72% less than the average for the last 10 years.

· The cost of chemicals used in drinking water and wastewater treatment is projected to increase about $1.2 million or 58%. Without the increase in chemical prices, the proposed FY 2010 operating budget would be about 6% less than the current budget.

Cost reductions

The proposed operating budget reflects 35 cost reductions totaling $1.7 million including:

· Eliminating 12 positions and freezing 7 additional vacant positions.

· Deferring a sewer maintenance program (root control, which is part of OWASA's overall program to prevent wastewater overflows from sewers).

· Delaying water meter replacements in FY 2010.

· Reducing recreation days at University Lake from the present four days per week (Fridays through Mondays) to two days (Saturday and Sunday). Recreation at the Cane Creek Reservoir was reduced to one day per week in 2008. Because user fees cover about 55% of lake recreation costs, reducing the recreation days would reduce the expense covered by ratepayers.

The proposed FY 2010 capital budget of $5.7 million is 41% less than the current level.

OWASA began cutting and deferring costs in the fall of 2007, in anticipation that the drought beginning then would lead to conservation and reduced revenues.

Water demand and fixed costs

While reduced water demand affects water and sewer revenues, lower demand does not have the same effect on costs because many of OWASA's costs are fixed. For example, OWASA must have staff on duty to operate and maintain the drinking water and wastewater treatment plants 24 hours a day, and the number of staff are needed is the same whether water demand is 15 million gallons a day or 5 million gallons a day. (Lower flow levels at the treatment plants the amount of chemicals needed and normally reduce energy costs.)

Similarly, lower demand does not affect the need to test drinking water and treated wastewater for compliance with Federal and State standards to protect public health and the environment.

The number of OWASA's customer accounts has risen, as noted above, so the workload for reading meters, preparing and mailing bills, etc. has increased.

Since 2001, the size of the water and sewer pipe systems maintained by OWASA has increased about 10%, from 654 to 712 miles. OWASA's workload for water and sewer pipe maintenance primarily reflects the size of the system rather than the volume of flows in the pipes.

OWASA is continuing to cut costs and is working to maintain the quality and reliability of services with fewer resources. The elimination/freezing of 19 positions represents more than a 10% reduction from OWASA's previously authorized workforce of 150 positions.