Opinion: Marion Selectmen unhappy about water rates too

Oct 26, 2020

Nobody is happy with their most recent water and sewer bills. The members of your Select Board are really not happy. Massachusetts requires us to submit an annual balanced budget each Spring for our Sewer and Water Enterprise Funds and for the General Fund. We reluctantly approve rate increases for the Sewer and Water funds only to the extent necessary to balance each budget. We estimate projected water usage for the Water fund and that, in turn, determines estimated usage for the Sewer fund and then we calculate the rates necessary for balanced budgets. Let's focus just on water bills to explain why the big jump in water bills for this past quarter.

Your water bill is a function of your amount of water usage and the level your water usage puts you in our tiered system of rates. All water bills include both a fixed fee to have the service available to the property as well as a usage charge. The usage charge is calculated using an increasing block (higher price for higher volumes) rate structure with three tiers. Tier one has the lowest rate and rates increase incrementally in tiers two and three. When your water usage pushes you into a higher tier, you pay more for a given volume of water used. The system is, in part, designed to encourage conservation.

The volume of water used in Marion year-to-date is up approximately 19%. This was probably due to the very dry summer plus more summer residents and extended stays due to Covid19. However, if your increased water usage pushed you into a higher pricing tier, your bill went up by more than your percentage increase in usage (which remember was 19% for Marion as a whole) and this is before factoring in the increase in rates approved by the Select Board prior to the start of the fiscal year.

The state requirement for us to balance the budget left us no choice but to approve a substantial increase in rates (the percentage depended on the tier) for FY 2021. We had to cover the cost of the debt service for approximately $2 million of additional debt to finance infrastructure improvements. After putting it off for two years, this year, we proceeded to install a new water main on the part of Route 6 running roughly from the S curve at Converse Road to Rocky Nook Lane. The bad news is that this project cost almost $2 million, but the good news is that it came in under the original $2.6 million estimate.

Most of the Town's water infrastructure is over 50 years old and approaching the end of its useful life. We still have a few galvanized water mains in remote locations in Town. A number of our water mains are undersized, which impacts water pressure and, very importantly, fire flow. Fire flow is the volume of water per minute available to fight fires. Low fire flow actually raises the cost of your homeowner's insurance based on a community wide rating system.

We probably should be spending approximately $2 million per year on our water infrastructure, but it is increasingly clear we can't afford to spend $2 million on our water system even every three years, let alone every year. Doing so would drive up our water rates to levels unaffordable for many people. We now are developing a plan for us to spend approximately $1 million on our water infrastructure every four years. These expenditures would be timed, to the extent possible, to coincide with maturing debt so there would be minimal impact on rates.

As part of this plan, we are evaluating the potential and impact of establishing a capital stabilization fund within the Water Enterprise Fund. This would set aside maybe 5% of revenues each year, resulting in a financial cushion. The cushion would cover most emergency repairs and mandated regulatory upgrades without impacting rates. Establishing this capital reserve will negatively impact water rates in the first year by that 5%. But it is prudent, particularly given the decision to stretch out the timing for overdue upgrades to our system.

We won't know until the analysis is done, but our hope is this plan will keep water rate increases at manageable levels for all of us over the next several years. Please remember you control usage and increased usage drives up your water bill.

Sincerely,
Marion Board of Selectmen 
Randy Parker, Chair
John Waterman, Vice Chair
Norman Hills, Clerk