Council passes ordinances on water rate increases

Published 12:00 am Wednesday, January 14, 2009

Staff Reporter

EDGARD – Faced with a $1.5 million deficit in the parish’s utility system fund, the St. John Council decided Tuesday to approve two ordinances that will affect the rates the parish charges for water in an effort to remedy a serious cash flow problem within the department.

The first ordinance pertains to a change in the method in which the parish calculates the consumer price index (CPI) for parish water services. Under the new system, residential customers could see a monthly bill increase of about $1.57.

The ordinance changes the water rate CPI from a National Consumer Price Index to the U.S. city average 12-month percentage change in the Water, Sewer, and Trash Collection Service group of Consumer Price Index for Urban Wage Earners and Clerical Workers’ (CPI-W).

The new index, which is the same one that is used to compute the annual consumer price index adjustment for the parish’s sewer rate, comes with a 6.7 percent rate adjustment. The previous CPI only produces a 1.1 percent adjustment.

The second ordinance creates a $1 rate increase per thousand gallons on the parish’s two highest consumption tiers. This means that customers who use 30,000 to 50,000 gallons of water per month would be charged $3.93 per thousand. Customers using over 50,000 gallons would be charged $3.82 per thousand.

St. John Public Information Officer Buddy Boe said the rate increase only affects about 380, or 2.3 percent, of the parish’s water customers. He said most of those 380 are big industry or commercial outlets in the parish.

“This is not something we wanted to do willingly,” said Parish President Bill Hubbard. “We are dealing with factors beyond our control that should have been monitored and dealt with under the previous administration.”

Hubbard said previous Parish President Nickie Monica’s administration did not perform regular maintenance on the parish’s water system, allowed overtime to get out of hand and failed to collect over $761,000 in delinquent water bills. Hubbard has successfully executed plans to curb overtime and get compensation on past due account balances, but the progress has not been enough to improve the deficit.

In addition, Hubbard said the parish is also losing money on “state of the art” computerized water meters that were designed to save money and produce more revenue. Hubbard said a study of the parish’s water system showed that even with a recent population increase of 7.8 percent in St. John, there has been a decrease in usage per customer and a decrease in revenue per customer. These new meters were put into service by the Monica administration and fully installed by October of 2007. At the time of purchase, Monica promised in a letter to the council that he was “very confident in the estimated costs and savings projections from the new meters.”

Boe said the meters cost the parish $6.2 million and are being paid for with a 10-year bond that is adding about $1.7 million in interest. Boe said the parish pays $658,000 annually. He said two payments have already been made and a third is due in early 2009.

“We have to come up with this money to keep our bond rating,” said Boe. “The company that sold us the meters has been paid, we are paying the bank.”

Boe said the administration also has plans to make major repairs to several water treatment system facilities, water intake pumps, fire hydrants and water tanks and towers. The Council recently voted to declare an emergency to make repairs to the Ruddock Well Pump that failed. There is also serious maintenance needed at the Edgard Water Intake Pump, which has been running on a temporary diesel generator.

“This administration is committed to making the best out of this new meter system,” Hubbard said. “It is our intention to keep the water rates as low as possible, however, we also must maintain the financial integrity of the parish’s accounts.”