CAPE MAY — City Council approved a water/sewer fee increase Feb. 17 that will raise rates for residential users about 25 percent.
The city’s water/sewer utility is dependent on consumption from customers to balance its budget. A total of 18 million less gallons of water was consumed in the city last year.
In 2008, the city collected $333,000 less in water/sewer revenue attributed to fewer tourists and year round residents and shorter stays from second home owners. Household and business water conservation also contributed to less water consumption.
The reduced revenue resulted in $200,000 less in the utility’s surplus account.
The proposed rate increase would double the water facilities charge, which is a flat fee to cover the cost of wells, treatment and infrastructure. The annual fee is determined by the size of a customer’s water meter.
City Manager Bruce MacLeod said the city’s system of billing is 90 percent driven by consumption and 10 percent by fixed costs for city residents and 100 percent consumption driven for water sold to other towns and the Coast Guard.
“If consumption goes down, that has a major impact on our revenue stream,” said MacLeod.
“There was less consumption and therefore less dollars billed and obviously, less dollars collected,” he said.
Bulk users such as Cape May Point, West Cape May and the U.S. Coast Guard base, which purchase water from Cape May, consumed 11 million gallons less in 2008 than 2007. Consumption for all users in 2008 was less than 2006 levels, said MacLeod.
During public comment, resident Beth Acker read a letter from her neighbor who complained they were being punished for conserving water by higher water rates.
Resident Rich Townsend said the methodology of the city’s rate system rewarded residents that consumed more water and penalized those who conserve water.
Mayor Edward J. Mahaney Jr. said a year round, conservation-oriented water user, will see their water bill will increase by 25 percent. He said a major motel on Beach Avenue water/sewer rates would increase by 10 percent.
The mayor said council should reexamine the formula used to set water and sewer rates. He said the topic would be scheduled for council’s March 3 work session.
Mahaney called for a new funding formula to be determined by fall.
Councilman Niels Favre said called the rate hike “a perfect storm that has come at maybe one of the worst times it could ever come.” He said commercial water users would pass along the increase to their customers at a time when the city wanted to encourage more tourism.
Favre agreed a group should be formed to find a better rate structure.
Deputy Mayor Linda Steenrod described the city’s situation as being “between a rock and a hard place,” since the water/sewer utility must be self-liquidating. She said those who conserve water feel like they are getting their hand slapped.
Councilwoman Terri Swain said second homeowners did not come to Cape May as often as in the past last year creating less water use.
Most Cape May water customers have three-quarter inch meters for which the water facilities fee will double from $44 annually to $88. For those who have one-inch meters, the fee will double from $110 to $220.
The sewer facility charge will double from $60 to $120 for three-quarter inch meter users. Those with one-inch meters will see the facility rate double from $150 to $300.
The regular sewer rate will increase from $3.50 to $3.90 times the number of thousands of gallons consumed through the year. Peak demand sewer charge for the months April to October will increase from $8.25 to $9.85 times the number of thousands of gallons consumed.
Water usage rates will not increase.
The city’s proposed water/sewer budget is $6.4 million, which includes $300,000 revenue from a bond sale, a $100,000 increase in fees to the county Municipal Utilities Authority and $92,000 in additional debt service.
In addition, the budget shows a $31,399 increase over 2008. Including debt service and MUA fees, the budget increases a total of $223,529 or 3.6 percent over 2008.
Due to a $300,000 reduction in revenue, the city needs to raise $555,000 just to balance the water/sewer budget according to MacLeod.
