Background on Rates and Reasons for Increase in Rates

HIGHLAND COUNTY WATER COMPANY, INC.

 

BACKGROUND ON RATES AND REASONS FOR INCREASE IN RATES

 

 

  • THE COMPANY HAS ONLY INCREASED RATES ANNUALLY FOR THE PAST 7 YEARS BY INCREASING THE BASE MINIMUM CHARGE BY $.50 PER MONTH.

 

  • THE MINIMUM RATE PER MONTH FOR A 5/8” METER WAS $16.50 PER MONTH EFFECTIVE JULY 1, 2015, AND WAS $19.50 PER MONTH EFFECTIVE JULY 1, 2021 WHICH HAS BEEN A TOTAL OF $3.00 PER MONTH INCREASE OVER A 7 YEAR PERIOD.

 

  • ASSUMING THAT THE AVERAGE WATER BILL IN 2015 BASED ON 3,500 GALLONS A MONTH USAGE WAS ABOUT $31.50, THE INCREASE THROUGH 2021 WOULD BE $3.00 OR ABOUT A 1.4% ANNUAL INCREASE FOR WATER USAGE OVER THE 7 YEAR PERIOD.

 

  • THESE INCREASES HAVE ENABLED THE COMPANY TO COVER OPERATING COSTS WITH INFLATION OVER MOST OF THIS TIME PERIOD DUE TO LOWER INFLATION FROM 2015 THROUGH 2019.

 

  • INFLATION OVER THE PAST TWO YEARS HAS INCREASED FROM AROUND 1.3% IN FEBRUARY OF 2019 TO 8.0 % IN FEBRUARY OF 2022. 

 

  • THE INCREASE IN INFLATION HAS SIGNFICANTLY INCREASED COSTS OF MATERIALS SUCH AS WATER METERS AND PIPES AS WELL AS CONSTRUCTION AND OTHER RELATED COSTS. THE COMPANY HAS TO MAINTAIN ALL OF THE WATER LINES, WATER TREATMENT PLANT AND WATER STORAGE TANKS.

 

  • THE COMPANY WILL HAVE TO REHABILITATE EIGHT OF THEIR WATER TANKS OVER THE NEXT 8 YEARS.  THIS WORK EXTENDS THE LIVES OF THE WATER TANKS.  THESE COSTS ARE ESTIMATED TO BE APPROXIMATELY $750,000 TO $1,000,000 PER TANK DEPENDING ON INFLATION DURING THIS TIME PERIOD.

 

  • THE COMPANY HAS TRIED TO KEEP RATES AS LOW AS POSSIBLE WHILE DOING THEIR BEST TO PROVIDE QUALITY SERVICES TO ALL CUSTOMERS. 

 

  • THE ABOVE FACTORS HAVE PUT THE COMPANY IN A POSITION WHERE RATES ON WATER USAGE NOW MUST ALSO BE INCREASED TO COVER COSTS.

 

  • A $3 INCREASE IN THE CHARGE PER 1,000 GALLONS IS NECCESARY.  IN ADDITION, A $.50 INCREASE IN THE MONTHLY BASE RATE WILL BE NECESSARY. THESE INCREASES ARE NEEDED TO PROVIDE THE RESOURCES TO COVER THE COMPANY’S OPERATING COSTS AND CAPITAL COSTS TO MAINTAIN ALL THE ASSETS THAT PROVIDE WATER TO ALL THE COMPANY’S CUSTOMERS.