The average Edinburgh Municipal Water Utility customer will pay about $10.31 more per month after the town council authorized a rate increase last week.
The rate increase was made as Edinburgh aims to generate $6.4 million for a new water plant, which town officials say has been due for an upgrade for more than 5 years. The 1997-built plant has become a drain on the town utility’s finances, said Dan Cartwright, town manager. Thousands of dollars have been spent on plant repairs, while the town also has to add the chemical sodium permanganate to help the aging filtration system remove discoloration from the water, he said.
The plant will cost and estimated $6.7 million to build and $8.1 million in total. The total also includes design, engineering and bond financing costs, said Mitchell Eschweiler, of Baker Tilly, the accounting firm hired to perform the rate study. To lower the cost of the new plant, the town council appropriated $956,500 that the town received from the American Rescue Plan Act (ARPA), along with a $700,000 grant from the Indiana Office of Rural and Community Affairs.
The town council allocated the ARPA funds to this project to lower the cost of the rate increase to ratepayers, council members said. Utility projects are an approved use of the federal COVID-19 relief funds.
Originally, ratepayers could have paid up to $12.02 more monthly, but using the ARPA funds allowed the council to reduce the maximum increase to an average of $10.31 each month.
The current average monthly bill for a single-family home is $31.62, meaning the average customer will pay $41.93 per month with the increase.
The council was given several rate increase scenarios and approved the maximum rate increase of $10.31. The difference between the scenarios is how much extra money that would be collected for future water system projects, so by choosing the maximum increase, the utility will collect money for the projects more quickly, Eschweiler said.
The rate increase will fund future projects and provide funds to pay back the $6.4 million State Revolving Fund (SRF) loan that is being taken out for the new plant. The loan is due to be paid off in 2042, town documents show.
The town council held a public hearing last week before approving the new rates. One member of the public asked why the town chose an SRF loan to fund the new plant rather than municipal bonds. An SRF loan is a process by which the state purchases municipal bonds and allows communities to pay the government back over time with a low interest rate, Baker Tilly representatives explained.
The new plant will be built next to the old plant at 308 N. Walnut St. The old plant is planned to be converted to a storage building when the new plant comes online.
The plant will also up the town’s current capacity from 1.4 million gallons per day to 2.1 million, with the ability to expand to 2.8 million with an additional filter and pump, Bill Jones, Edinburgh’s water superintendent said last year. With current daily water usage at about 700,000 gallons per day, there is plenty of room for commercial, industrial and housing growth, he said.
The rate increase will take effect after the increase is advertised to ratepayers via legal notice.