By SUE SUCHYTA
Times-Herald Newspapers
DEARBORN – The city council approved a new fixed versus commodity percentage ratio for water bills June 15 that will cost most residential users the same, but will help stabilize water department revenue.
Fixed cost is the component of the bill which stays the same, and recognizes the cost of maintaining a water and sewage system, while commodity cost is based on how much water a customer uses.
Currently, 22 percent of a water bill is based on fixed cost and 78 percent is commodity cost. The 2022 fiscal year bill will be based on a 35 percent fixed cost and a 65 percent commodity cost.
The new rate is designed to decrease water department revenue fluctuations, which better supports the department’s budget.
Cooler, wetter weather typically results in less residential water usage, whereas hot, drier weather results in increased water usage.
Water usage and sales decline when population decreases, business use decreases (as with empty hotels, restaurants and offices), low flow toilets decrease water usage, industrial and manufacturing users change water consumption (by changing or eliminating a process), and discretionary water use practices (such as irrigation, sprinkling and car washing) change.
When a city collects a larger component of revenue through fixed charges, it lessens the negative revenue impact of decreases in water consumption.
Fixed charges recognize that there is value to a community maintaining its water and sewage systems, even when a building is vacant and not using water.
Water must be on standby for firefighting, both in the form of hydrants and infrastructure capable of delivering thousands of gallons of water per minute.
In addition, the city must pay for “non-revenue water” – the 10 to 12 percent lost to leakage, firefighting, hydrant flushing, water main breaks, construction and repairs, street sweeping, sewer cleaning, theft, and billing and meter inaccuracies.
The city must also pay for the sewage treatment of rainwater and runoff in combined sewer areas, if rainwater and runoff is not flowing into separate pipes. The city pays the Great Lakes Water Authority for sewage treatment.
While affluent users with pools and sprinkler systems tend to use more water, low-income users with older plumbing fixtures, as well as leaky pipes and faucets, also tend to use more water.
So, with a larger fixed cost component of the water bill, cost-conscious customers are less likely to reduce water consumption, which can lead to less yard watering, which translates to poorer neighborhood aesthetics and appearance.
Public Works Director James Murray said, in a May 13 memo to the city council, that, with the ordinance change, retail sewer rates increase by 0.04 percent, and retail water rates will be reduced by 6.7 percent.
After July 1, 2021, the new rates will be applied to all bills, and typical water and sewer bills will decrease by 2.8 percent.
Tap fees and charges, which haven’t changed since 2008, will be increased to reflect increases in labor and material charges.
Tap fees are charges assessed to install a new water or sewer connection, and are based on the size of the piping connection, and whether it is for residential or commercial use.
Dearborn purchases its water from the Great Lakes Water Authority, based on a 60 percent fixed cost. The city pays GLWA for sewage disposal services at a 100 percent fixed rate cost. The city of Dearborn pays $31 million annually to the GLWA.
The city water department budget includes department expenses and the cost of the city’s water and sewer capital improvement plan.
The water department’s capital improvement plan includes infrastructure replacement projects, operation and maintenance of 370 miles of water lines, cleaning and maintenance of 640 miles of sewer lines, metering, billing and collections.
The department must also operate and maintain sewage lift stations, two major sewage pumping stations and four combined sewage overflow capture facilities.
It also has revenue bonds, and interest and principal payments which fall under the water and sewer division.
The city is also continuing to replace lead water lead lines from water mains as part of an unfunded state mandate.
The decrease in water usage and an increase in the need for capital investment in the city’s infrastructure most influence the city water department’s operations and planning.