Declining usage leads to higher prices

Feb. 5, 2009

By Greg Elias

Observer staff

Ongoing layoffs at the IBM plant in Essex Junction have uprooted workers and rippled through the economy. Now a lesser-known consequence of the company’s downsizing has emerged: higher water rates.

The Williston Selectboard last week approved water and sewer budgets for the coming fiscal year. The water budget reflects a rate increase by the Champlain Water District, which serves Williston and 11 other water systems. The sewer budget accounts for higher charges by Essex Junction for use of its sewer plant.

The Selectboard will not finalize rates until June. But Public Works Director Neil Boyden said he expects Williston water rates to rise 6.7 percent and sewer charges to jump 11.3 percent.

For the average home, defined as one that uses 70,000 gallons of water a year, the quarterly water bill will jump $2.62, according to Boyden. For the same home, the quarterly sewer charge will rise by $6.12.

The Champlain Water District hiked the rate largely to account for decreased usage amid rising fixed costs, said Jim Fay, the district’s general manager. IBM, by far the biggest water user, is the main reason usage is falling. The company now uses 1.3 million gallons a day less than it did eight years ago.

Meanwhile, the district must maintain “the same aging infrastructure,” Fay said, the cost of which is increasingly absorbed by users other than IBM because revenue comes from per-gallon charges.

Selectboard members rued the pending rate increases.

“So it’s really the reverse of a market economy, isn’t it?” said Ted Kenney. “It really does show that government isn’t a business. People are using less, so it costs more.”

Conservation is a relatively small factor in the district’s drop in water sales from 11.3 million gallons a day in the 1999-2000 fiscal year to a projected 8.8 gallons in the coming fiscal year. Fay figures that IBM’s falling use accounts for 85 percent of the decrease.

On the sewer side of the bill, rates this year will rise for very different reasons.

The village of Essex Junction provides sewage treatment for its own residents as well as for the towns of Essex and Williston. The village originally said it would hike per-gallon treatment charges by 31.1 percent. The increase was later reduced to 17.8 percent, according to Village Manager Dave Crawford.

Williston officials objected to accounting changes that shifted expenses from Essex Junction’s operating budget to its sewer budget. Williston also opposed a plan to offset a six-figure deficit in the current fiscal year’s sewer budget by increasing the coming year’s budget.

“We felt that was just way too high,” Town Manager Rick McGuire told the Selectboard. “We put a lot of pressure on the village to change the way they were doing things.”

The village will use bonds to pay down the deficit, which was caused by unexpected maintenance costs, Crawford said. Fewer operating expenses will be attributed to Essex Junction’s sewer budget, further reducing the retail rate.

The Williston Selectboard unanimously approved a $756,220 water budget, and a sewer budget totaling $894,320 for the next fiscal year. Rates are usually finalized in late June, just before the new fiscal year starts.

The town is minimizing what could be even larger rate increases by absorbing some of the rising costs within its own water and sewer budgets. The quarterly increase for the water bill, for example, would have been $4.26 for the average homeowner if the town simply passed all of the water district’s rate hike on to users.

The so-called retail rate, what Williston pays for water and sewer, accounts for a little more than half of the annual budgets for each of those utilities. The remainder pays for maintaining and operating pipes, pumps and other infrastructure.

Williston is absorbing some of the rate increases by setting aside less money for replacing aging pipes and pumps, Boyden said. He said maintenance can be deferred for a year with little effect, but such a budget maneuver cannot be used for long before the infrastructure decays and the tab comes due.

“There’s not much more I can absorb,” Boyden said.