Lebanon
But the City Council still will have a say over which residents and businesses are most affected. The city-operated utility could choose to increase rates across-the-board, or councilors could instead opt to implement a new billing structure that would charge the system’s heaviest users more, the study found. At the same time, officials in neighboring Enfield are preparing to begin their own wastewater study, which could result in the town building its own sewage treatment facility apart from Lebanon.
The Lebanon study, which was completed by Massachusetts-based Raftelis Financial Consultants, is scheduled to be discussed during the City Council’s meeting on Wednesday. The study was ordered as city officials contend with costly sewer and water projects, according to Lebanon Finance Director Len Jarvi.
The largest of those efforts is a federally mandated sewer and storm water separation in about 15 miles of Lebanon’s sewer system to avoid combined sewer overflow, or CSO, where untreated sewage is discharged during heavy rains.
Construction on the multi-year CSO project is estimated to cost the city about $69 million by the time the work is completed in 2020.
As the project has continued, the city has taken on greater debt. Lebanon is now $2.5 million in debt on its sewer system, which could expand to $3.3 million in 2023, the study said.
Debt on the water system is now at $866,930 but also will grow to $2.1 million over the same time period.
That’s partially because the city plans to spend an additional $30.7 million over the next five years maintaining the two utilities, with much of that money going toward continued pipe separation, pump station upgrades and line repairs, according to the study.
Roughly 90 percent of those expenses will be paid by taking on credit, with another 9 percent coming from existing funds.
Meanwhile, consultants estimate that the number of water and sewer customer accounts will remain flat, and the amount of usage is expected to decrease 1 percent annually.
The combination of deficits, debt and decreased usage means that over the next five years, city officials are forced to increase the amount customers pay.
“Based on the assumptions laid out in this report, the existing rates will not be sufficient to recover the system revenue requirements over the forecast period for both utilities,” the study said.
One option would be to build annual increases into the city’s current system structure.
Annual increase of 8 percent for water rates and 7.2 percent for sewer rates for each of the next five years would put the utility on track to meet its revenue needs, according to the report.
In 2019, that would lead to an average bill of $763, or a $53 increase for ratepayers.
The city has been raising rates, but not quite as a quickly at the consultants’ report recommends. For example, last December, the City Council approved a 5 percent water rate increase and nearly 5 percent sewer rate increase. The year before that, the city raised fees for both by 7 percent.
The other two options the City Council will consider would include a bigger overhaul of the utility’s billing practices, especially for it smallest and largest users.
Currently, Lebanon charges its water and sewer customers based on a metered reading of the amount of water they consume. But the bottom 20 percent of customers — those that fail to use more than seven cubic feet of water per quarter — pay a flat minimum fee.
While the minimum charge provides the city with a steady income stream, the consultants said, it also discourages customers from conserving water because one-in-five users can’t lower their bills any further.
To address that issue, the study calculated the impact on annual bills if the minimum fee were removed and rates instead were tied to the size of a customer’s meter.
Those with larger meters tend to be commercial customers who use more water, the consultants said.
Under the scenario, the average ratepayer’s bill would increase to $903 next year, a rise of about $192, the study found. That’s an increase of 27 percent.
Over the next four years, the rate increases would continue at about 7.4 annually.
In an attempt to avoid the large one-year increase, the consultants also estimated what would happened if the minimum fee was eliminated but the rate increases were spread more evenly over five years.
Under that calculation, the average Lebanon user could expect to pay an additional $88 next year, followed by increases ranging from $57 to $112 the four years after that.
The author of the study said all three proposals are “viable” and worth consideration.
Meanwhile, neighboring Enfield has ordered its own study, which will explore whether the town would be better off breaking away from Lebanon’s sewer system.
Enfield now sends sewage from its more than 480 water and sewer customers to the city’s West Lebanon treatment plant under an agreement that will expire in 2019. While the agreement is likely to be extended, some residents have questioned whether in the long run, the arrangement is worth the roughly $311,000 annual bill.
Enfield officials have also lamented their lack of control over the town’s own sewer rates, which are normally raised every time Lebanon increases its fees.
Voters at Town Meeting in March approved a $30,000 loan for Enfield’s study, which will be conducted by Massachusetts-based David Prickett Consulting, a firm that specializes in water and sewer engineering. Work will begin in September and likely completed before the end of 2018, according to Town Manager Ryan Aylesworth.
Aside from studying where Enfield should build its own sewage treatment plant, consultants will also be asked to project the town’s future sewer needs and whether another type of rate structure could help pay for improvements, Aylesworth said in an interview last week.
In the meantime, town officials are discussing extending the agreement with Lebanon.
“Even if down the road we wanted to construct our own facility and sever the tie with Lebanon, clearly that’s something that doesn’t happen overnight,” Aylesworth said. “That would take years to plan and execute.”
The Lebanon City Council is scheduled to discuss its water and sewer study at 7 p.m. on Wednesday in City Hall.
Tim Camerato can be reached at tcamerato@vnews.com or 603-727-3223.