Crews repair a water main break at 9 Mile Road and Gratiot in Eastpointe on Friday. (David Coates / The Detroit News)
Suburban customers will pay an average of around 4 percent higher rates for water service but the proposed rate changes for 2014-15 vary widely by community.
The rate increases proposed by the Detroit Water and Sewerage Department range from an increase of more than 14 percent in Romeo and Rockwood to a drop of more than 16 percent in Harrison Township. Detroit residents will see their rates rise 4.6 percent.
The overall increases — or savings — may not be reflected in an individual’s water bill. Suburban communities add charges for their customers in addition to the wholesale rate billed to cover infrastructure and operating costs. Communities pay a combination of a fixed amount per month as well as an amount for every thousand cubic feet of water — or every 7,480 gallons.
Distance, elevation and the amount used on the busiest hour of the busiest day of the year play roles in how much a community is charged by the Detroit system.
Harrison Township reaped the savings because of a $1.3 million water tank that went fully operational last year. The township, with its marinas, experiences spikes in water usage in the summer when people flock to the boats, said Kenneth Verkest, Harrison Township supervisor.
“Our peaks are above average,” he said. “The storage tank allows us to fill it at night when the system isn’t so overloaded.”
By filling the tank at off times and drawing from it during busier hours, the township will save an estimated $300,000 a year. It means the savings will make up for the cost of the storage tank in about four years.
A drop in rates of more than 14 percent is because city officials were able to work with DWSD and negotiate lower rates, said Joseph Merucci, city manager. Usage in the city has declined over the years and the city committed to a lower water usage rate, resulting in lower charges.
“It’s excellent news for us,” Merucci said. “It’s welcome news for our community.”
Nicolette Bateson, chief financial officer of the Detroit Water and Sewerage Department, said the utility works to reduce its costs and rates its customers have to pay.
The relatively modest average increases come as Detroit Emergency Manager Kevyn Orr looks to spin off the department to a regional authority. The authority would run the system, while the suburbs would lease the workings and pay money to the general fund of Detroit.
Restructuring the department is a key component in Orr’s plan on providing cash flow to the city. It is believed the department’s debt could be refinanced under more favorable interest rates by bringing in suburban partners whose credit ratings are higher than the city of Detroit’s.
The sides remain in negotiation. Orr was hoping a deal would be reached by the end of last year, but suburban leaders quickly shot down an October proposal calling for $9 billion in payments over 40 years.
A more recent figure of $70 million a year also has been criticized with Macomb and Oakland officials calling a deal for that figure “dead on arrival.”
Staff Writer Charles E. Ramirez contributed.