City council looks to expand Low-Income Discount utility program

Larger commercial utility base rates could increase in 2022

Steps are now in place for this fall to expand the City of Sequim’s low income discount utility program, simplify the city’s sewer utility base rate and shorten price discrepancies between residential utilities accounts and some higher-usage commercial facilities.

A public hearing will be held this fall during the 2022 budget season after Sequim city councilors voted unanimously Monday to bring back potential changes to utility rates.

Their decision follows a May 10 conversation on the Low-Income Discount (LID) utility program expanding accessibility to utility discounts to the poor or infirm from 50 utility customers to 250.

The city currently has more than 3,000 accounts, so city staff estimates the expanded program could incur $104,000 in additional costs to the city.

The discount provides about 50 percent in savings to eligible, low-income residents, but each household must qualify for Clallam PUD’s discount and/or be under 150 percent of the federal poverty guideline,

To fund the expanded program, city staff proposed following recent utility studies to adjust water and sewer meters to match the American Water Work Association’s (AWWA) standards.

Sequim Public Works Director Matt Klontz said at the June 14 city council meeting a 2020 utility rate study made it clear “the commercial customer group wasn’t paying their fair share of utility costs.”

Those range from 3-inch sewer pipes at retirement facilities and larger box stores, to 2-inch pipes at grocery stores and medical centers, to 1.5-inch pipes at restaurants.

He said larger water and sewer pipes are between 50-67 percent at the recommended AWWA base rate, and it was a problem a 2014 rate study also revealed. Klontz said former city councilors recognized this discrepancy but did not want to throw the burden on businesses and public institutions such as the Sequim School District and Sequim Boys & Girls Cluball at once.

“(The) council elected instead of ripping off the band-aid and adjusting all the way to the AWWA standard, they picked a middle ground,” he said.

He said the cost discrepancy is being made up by all other users, including single-family, multi-family and hotel/motel accounts because the commercial facilities are underpaying.

According to the Cost-of-Service Analysis from the city’s rate study, commercial customers were under-paying the water utility at 36.5 percent or $247,766, and sewer at 12.5 percent or $107,660.

Tiered system

To match AWWA standards, water base rates for 3/4-inch to 3-inch pipes would go up 50 percent per month for about 184 commercial accounts and up to 100 percent for the same sizes for 120 sewer accounts.

Klontz said 271 water and 229 water users at ⅝-inch would be unaffected.

To soften the significant increases to users, councilors directed city staff to find a reasonable method to space out the increases over two years, starting Jan. 1, 2022.

Deputy Mayor Tom Ferrell said it was against his nature to raise costs 100 percent and that it “didn’t seem right.”

Sue Hagener, Sequim director of administrative services, said city staff will communicate with impacted businesses and see if they’re interested in smaller meters to save money.

“It’s a cost to them, but it’s resulted in lower monthly fees,” Hagener said.

Klontz said after the 2014 rate study and changes, public works staff reached out to impacted customers and only a few were frustrated with the changes.

“Many recognized they’ve been getting a great deal for many years,” he said.

City councilor Mike Pence preferred incrementally putting in increases and asked how the numbers balance with the low income program costing $104,000 a year to the city but with potential changes rates that would mean about three times more in revenue.

Klontz said it does generate more revenue than necessary but staff are anticipating a higher than normal inflation rate in coming years along with already anticipated proposed increases in rates and utility expenses.

Councilor Keith Larkin said he anticipates a “hard run at changing meters” as they approach the rates potentially changing in 2022.

• Councilors also approved simplifying the sewer base rate charge for customer bills and administrative purposes. They voted to eliminate a higher charge base rate for all sewer users so they will be charged the $59.38 rate regardless if they go over or under 4,488 gallons of sewer waste. The higher base rate was $68.90 and will save about 480 residential customers about $9.52 a month.

Klontz said city staff feel those customers are likely families or shared households that will benefit from the price reduction.

• City staff will also prepare a breakdown of rate information on the Jamestown S’Klallam Tribe’s sewer agreement from Blyn and Clallam County’s sewer agreement from Carlsborg to Sequim. Klontz said they pay based on gallons of waste along with other fees, but he will provide the information at a later date.

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