Cape May Approves New Water Rates

CAPE MAY — City Council adopted a new water/sewer billing formula March 2 that may be more palatable for low volume water users.
A fixed fee of $36.25 for each of four quarterly billing periods would cover the first 5,000 gallons of water. Water use above 5,000 gallons will be billed at $8.25 per 1,000 gallons.
A sewer rate change has a minimum fee of $65 per quarter covering 5,000 gallons. Use above 5,000 gallons would be billed at $16.50 for each additional 1,000 gallons.
The city’s previous formula was centered around a facilities charge which is a fixed amount based on the water meter size and rates that change from the peak summer season to a lower rate in winter.
Last August, City Council authorized the formation of a water/sewer rate study committee to find a fair and equitable system for billing for ratepayers. The committee met for six months and reported to council.
Water consumption in the city decreased over 8 million gallons from the summer season of 2008 to 2009, the decrease blamed on the recession’s effect on tourism or cool and rainy weather for much of June 2009.
As a result of low water consumption last year, City Council approved a water/sewer fee increase that raised 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.
The city was faced with another water/sewer rate increase due to low consumption last summer.
Jay Schatz, chairman of the Hotel/Motel and Lodgings Association asked if any large water users were on the committee. Mayor Edward J. Mahaney Jr. said two members owned bed and breakfast inns but no hotel owners were part of the group. He said few volunteers came forward for the committee.
The mayor said large beachfront hotels and motels, the city’s largest water consumers, were a part of 10 models studied for the new formula. Schatz said he feared hotels and motels would see a significant rise in their water bills. He predicted water consumption would decrease as commercial users conserved more water through water saving devices.
Mahaney said sewer charges are passed along to the County MUA, which is not subject to any government body.
City Manager Bruce MacLeod said in 2009 the city received $1.8 million from the old formula in water revenue. He said the new methodology would yield the same amount of money.
For the sewer utility, the city needed to raise $282,000 in additional funds to balance the budget. In 2009, the sewer bills brought in $2.8 million. The city needs $3.1 million this year, said MacLeod.
Rates under the new formula will be the same for all users with no distinction between residential and commercial, he said. The new rates will redistribute the “revenue pie,” and not unfairly impact low-end water users and not reward high-end consumers, said MacLeod at an earlier meeting.
Mahaney said 3 percent of customers used 80 percent of the city’s water. The new billing formula is retroactive back to Jan. 1 of this year.