Clallam Public Utility District is considering three potential scenarios to raise water and wastewater rates to fund improvements in the system.

PUD commissioners discussed in a special meeting July 24 the three proposals following a cost-of-services analysis that was done with its consultant group FCS.

Bowen Kendrick, water and wastewater manager, presented them to commissioners and outlined them in a letter that went out to PUD customers on July 13.

The PUD plans another special meeting regarding water rates at 10 a.m. this coming Monday (July 31) to consider final action. The public can join the meeting via Zoom or attend in person. Information can be found on the Clallam PUD website: clallampud.net.

Two of the proposals would mean significant increases for the current year, with additional smaller increases in rates through 2028.

Another scenario proposes a slight increase for the current year with slightly larger increases in rates through 2028.

The table outlining the proposed scenarios can be found at clallampud.net/www-cos.

“The driver of these increases is most specifically in regards to our capital improvement plan with regards to water/wastewater infrastructure replacement,” Kendrick said on July 24.

“The PUD has been focused on building out our water systems as some of our current water systems are nearing 60 years in age and need reinvestment,” he said.

“Our challenge is to continue growing our water systems to support a growing community while reinvesting in our existing infrastructure to continue to provide the required services of a water preparer,” he added.

The average residential customer pays $76.36 per month for 650 cubic feet of water.

Under scenario A, that cost would go up 35 percent for the remainder of the year with a 3.5 percent hike every year until 2028, which comes to about $3.60 to $4.15 increase each year.

That means the average monthly bill for residential customers would go up to $103.09 per month beginning in September and continuing through February. The maximum monthly rate of $122.44 per month would be reached in 2028.

“The cumulative increase will track the bottom line, basically what the total increase to a customer’s bill is at what period in time, so at the end of 2023, the total increase for scenario A would be $106.92 and in 2028 it would be $544.68,” Kendrick said.

He said that scenario explores the outcome of a larger 2023 rate increase aimed at building cash reserves in the near term, reducing the magnitude of future increases to typical inflationary percentage rates over a five-year period and reducing the need for near-term borrowing.

“The main driver for this scenario is looking at our fiscal targets, which include a cash-on-hand minimum of 122 of operational cash on hand,” Kendrick said.

Scenario B considers hiring a three-person, in-house construction crew in 2027 that would focus on water main replacement, which would have long-term savings and reduce the magnitude of rate increases after 2029, the PUD said.

That scenario would call for a 5 percent increase of the current 2023 water rate followed by a 9.75 percent increase from 2024-2028.

That means the average residential monthly bill would go from $76.36 to $80.18 for the remainder of 2023 and be capped at $127.68 in 2028.

Cumulative increases for residential customers would be $15.28 in 2023 and $593.16 in 2028, Kendrick said.

The cost of capital projects has gone up significantly since 2019 when they were first budgeted, necessitating the increases.

One of the solutions Kendrick presented to the commissioners is the idea of hiring in-house construction for the PUD to work on capital projects.

“On the front end of in-house construction is in-house engineering, so right now we’re looking at about 15 to 30 percent of water main replacement costs are historically third-party consultant costs,” Kendrick said.

“Those costs are projected to be over $2 million by 2027, 22 percent of that is about $450,000, that we’re expected to spend per year in third-party engineering consultations if we stay the course we’re on right now,” Kendrick said.

Finally, Scenario C blends scenarios A and B and aims to combine the short-term benefits of a larger 2023 rate with the long-term benefits of hiring an in-house construction crew.

That scenario would increase the rate for 2023 by 15 percent with a 4.75 percent increase from 2024-2028.

The average residential monthly bill would go up from $76.36 to $87.81 for the remainder of 2023 and be capped at $110.74 in 2028 with cumulative increases of $45.80 in 2023 and $179.10 in 2028.