Cape May to Set New Water Rates

CAPE MAY — City Council will adopt a new water/sewer billing formula based on a fixed charge of a set dollar amount with an allowance for the first 5,000 gallons of water use included in the fee with use above 5,000 gallons to be billed at an excess fee per 1,000 gallons for each billing period.
The city’s present 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 commission to find a fair and equitable system for billing for ratepayers. The commission has been meeting for six months and has submitted a report 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.
The commission evaluated the current billing formula, which was formed in the 1990s and reviewed billing formulas from other towns.
City Manager Bruce MacLeod said the commission studied the level of water consumption by users taking into account year round and seasonal residential water customers. He said the commission looked at commercial water uses such as hotels, restaurants and retail shops.
MacLeod said the study had nothing to do with bulk users such as the U.S. Coast Guard base and the Borough of West Cape May which purchases water from Cape May with rates set by interlocal agreements.
The rate structure needs to generate enough revenue to fund the 2010 water/sewer budget of $6.2 million, which is $127,000 higher than last year, MacLeod said.
“We continue to see declining levels of consumption,” he said.
MacLeod said if the city stayed with its existing water/sewer billing formula, ratepayers faced a 10 percent increase to sewer rates.
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.
Mayor Edward J. Mahaney Jr. said 3 percent of customers used 80 percent of the city’s water.
If council approves the new billing formula, it would be retroactive back to Jan. 1 of this year, said MacLeod.