The OWASA Board of Directors approved the budget for next fiscal year Thursday, which includes rate increses that will take effect Oct. 1.


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.

Summary of the adopted budget and rates

The budget includes $18.5 million for operating costs, $9.7 million for 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.

For a typical residential customer using 5,000 gallons per month, the 9.75% rise in monthly rates will increase water and sewer bills by $6.68, from $68.24 to $74.92.

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

Reasons for the 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%) since 2001.

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 FY 2010 operating budget would be about 6% less than the current budget.

Cost reductions

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

· Eliminating 12 positions and freezing 7 additional vacant positions.

· No pay increase for OWASA employees.

· Reducing recreation days at University Lake from four to three days per week (Fridays through Sundays) starting on July 1st. (A reduction to two days per week was initially proposed for University Lake.) Recreation at the Cane Creek Reservoir will continue to be one day per week (Saturdays) as initiated in 2008.

· 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 and normally scheduled testing of large meters in FY 2010.

The FY 2010 capital budget of $5.7 million is 41% less than the current level. As was proposed earlier this year, the next phase of planned odor elimination improvements at the Mason Farm Wastewater Treatment Plant is not funded until FY 2011.

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. "Fixed costs" are costs which do not vary with changes in the scale of an operation.

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 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 reduce 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 12% reduction from OWASA's previously authorized workforce of 150 positions.