The city of North Bend raised its water and sewer rates effective on March 1, 2006, for the first time since 2000. Prior city councils did not raise rates because of two reasons. One was that in 2000, water and sewer rates were raised up front and the increase was to be enough to cover a period of three to five years, depending on inflationary factors. Secondly, it took a long while to determine the unknown costs that would be associated with securing additional water rights and what portion of those costs present customers would be responsible for, though these costs were ultimately not included in the current rate increases.
During the 2004 budget process, it became apparent that the water and sewer utilities were in need of a rate increase based strictly on current operations, aside from future growth needs. The utilities’ general facility charges (connection charges) also needed to be updated based on new cost estimates for future infrastructure improvements.
The city retained a consultant specializing in utility rate structures and proceeded to conduct a rate study starting in mid-2004. The water and sewer rate study had three components: 1) analyzing the operating revenue requirements of the water and sewer utilities; 2) changing the water rate structure based on meter sizes and a three-tier cost for water consumption to encourage water conservation; and 3) updating the general facility charges associated with connecting to the sewer and water systems.
Subsequently, effective March 1, 2006, I recommended and the City Council agreed to raise the water general facility charge from $2,000 to $2,700 to help pay for the cost of obtaining additional water rights and building new capital facilities. The sewer general facility charge was also increased from $3,500 to $4,700 to pay for future plant capacity needs for new customers.
Based on my recommendation, the City Council also increased monthly water rates for each of the next five years in order to pay for inflationary costs and the replacement of several major failing mains throughout the city.
Sewer rates were increased by 13 percent for one year only (2006) to cover inflationary costs and the debt payment associated with the updating of the sewer plant that took place over the last three years. Presently, no increases are foreseen for sewer rates until 2011.
The city of North Bend’s storm drain and flood utility has not increased monthly rates since its inception in 2001 and does not plan an increase for 2006.
Many people have raised the question: “Why can’t you run the city like a business?” In fact, the city’s utilities are operated like a business in that each utility has to stand alone and be self-supporting. The utilities cannot operate at a loss. It makes sense to me to pass legislation that requires rates to be adjusted annually depending on the needs of the utility. The City Council agreed with me and included this language in the final ordinance.
Mayor Ken Hearing