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Advisers: Port Arthur must increase water rates to cover industry’s rising costs

Port Arthur councilmembers are considering raises in water and wastewater rates that would help fund the cost of service through 2029.

The city is forecast to spend $165.4 million on water and wastewater projects from 2020-29 under its capital improvement plan. Port Arthur is already spending $60.56 million on construction of its wastewater treatment plant, thanks to a bond measure the council approved this spring.

Willdan Financial Services, which is advising the city on related operating costs, projects the city would have to borrow $80.6 million in bonds at a 20-year term with assumed interest rate of 3.5 percent through the decade.

Willdan Vice President Dan Jackson urged city officials to plan for the rising costs and recommended the city implement a five-year rate plan with annual adjustments effective January 2021 through January 2025, although it’s hard to tell whether the city would commit to making adjustments so soon.

“Water as a commodity is going up in price, not just in Port Arthur, but all throughout the state of Texas and all throughout the United States,” Jackson said. “… You are producing a commodity. Water is a product, just like anything else, just like a McDonald’s hamburger or a car or anything else. As the cost of producing a product goes up, you have no choice but to pass that cost through to your rate payers.”

According to a presentation Jackson gave to the council, rates are increasing due to inflation, general increases in the cost of doing business and environmental and other regulations.

The American Waterworks Association, Jackson said, forecasts water and wastewater rates across the U.S. to triple in the next 15 years.

The cost of service to run Port Arthur’s water system is presently a little more than $15 million, Jackson told councilmembers, but by 2029, that will rise closer to $20 million. For the wastewater service, the cost is just shy of $15 million and is expected to go up to $20 million.

While Port Arthur will retire some debt, it will issue more within the next 10 years, according to Jackson. Also, the city buys water from Lower Neches Valley Authority, and that cost is projected to rise from $1,833,276 in 2020 to $2,585,302 in 2029.

“The good news is, you know these trends are going to happen years in advance, so you can develop a long-term rate plan that gradually adjusts these rates where you can adjust your expenditures,” Jackson said.

The current monthly residential service charge is $7.50 in Port Arthur for a standard 5/8-by-3/4-inch and 1-inch meter size, in addition to a $5.06 volume rate per 1,000 gallons for up to 10,000 gallons of water used. A proposed plan would be $7.80 for the standard meter and $5.26 for the volume rate per 1,000 gallons up to 10,000.

For the average ratepayer who uses 5,000 gallons, the impact on monthly water and wastewater charges would be a 9.8 percent increase from $63.55 presently to $69.78 in January 2021, all the way to $90.68 in January 2025. The current rates are recovering less than the cost of service, Jackson said.

Councilmembers did not discuss the proposals during the open meeting this week.

Mayor Thurman Bartie asked Willdan representatives to further discuss during a workshop that’s expected to be scheduled sometime in January.

“Time will tell, but we’re going to have to do something,” Bartie said. “The people are giving projections on the cost of water, not just in Port Arthur but across the nation.”

Port Arthur current and proposed residential water and wastewater rate plans

This chart details the current and proposed water and wastewater rate plans for customers in Port Arthur, with the customer service charge broken down by meter size. (Each year reflect the proposed rates as of the month of January of that year.) Willdan Financial Services presented the proposed rates to the Port Arthur City Council:

WATER

Customer service charge  Current          2021   2022   2023   2024   2025

5/8-inch by ¾-inch                   $7.50                 7.80    8.11        8.36       8.61     8.86

1-inch                                            $7.50                 7.80    8.11        8.36       8.61      8.86

1½-inch                                        $8.50                8.84    9.19        9.47       9.75    10.05

2-inch                                            $10                    10.40  10.82      11.14      11.47  11.82

Volume rate per 1,000 gallons   

Up to 10,000                                $5.06                 5.26    5.47        5.64       5.81    5.98

10,001-50,000                             $5.31                  5.52    5.74        5.92       6.09    6.28

50,001-above                               $5.58                  5.80    6.04       6.22       6.40    6.59

 

WASTEWATER

Customer service charge  Current          2021   2022   2023   2024   2025

All meters                                     7.50                  8.70      10.09    11.71     12.17     12.66

Volume rate per 1,000 gallons   

Up to 10,000                               $4.65                5.39       6.26      7.26      7.55       7.85

10,001-50,000                            $4.88                5.66       6.57      7.62      7.92       8.24

50,001-above                              $5.12                 5.94       6.89      7.99      8.31       8.64

About I.C. Murrell

I.C. Murrell was promoted to editor of The News, effective Oct. 14, 2019. He previously served as sports editor since August 2015 and has won or shared eight first-place awards from state newspaper associations and corporations. He was born in Memphis, Tennessee, grew up mostly in Pine Bluff, Arkansas, and graduated from the University of Arkansas at Monticello.

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