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Regional water authority to raise wholesale rates 4%

Charles E. Ramirez
The Detroit News

Detroit — Metro Detroiters can likely expect their water bills to be higher next year.

The head of the region’s water authority said Thursday it will likely raise wholesale rates for service to its community customers by about 4.3 percent.

“It’s very preliminary,” said Sue McCormick, CEO and director of the Great Lakes Water Authority, or the GLWA. “That’s what we’re looking at this point. We’ve not yet proposed rates to the board and the board hasn’t taken any action.”

She said the authority, which provides service to 3 million customers in suburban Detroit communities, plans to set its water rates within the next couple of months. It will be the first time the region’s rates will be set since the authority assumed control of the system of the Detroit Water and Sewerage Department, or DWSD, which previously set the rates.

McCormick made the remarks Thursday during a meeting with The Detroit News Editorial Board. McCormick was named the authority’s CEO and director in October. Prior to that, she was the DWSD’s CEO and director.

Her comments also come a little less than a month before the authority’s public hearing on 2017 water rates. The noon public hearing on March 2 will be held in the 5th floor board room of the Detroit Water and Sewerage Department’s water commissioners office, 735 Randolph.

Chip Snider, Northville Township manager, said the community is expecting its rates to increase, but still doesn’t know exactly how much they’ll be.

“We know there’ll be an increase,” he said. “Once we know what it is, then we’ll start calculating what that will mean for our residents.”

Metro Detroit homeowners’ water bills will likely be higher since many communities tack on additional charges to the wholesale rate to cover their own infrastructure and operating costs.

McCormick said the main reason for the increase in its wholesale water rates is the continuing decline in demand for water in the region. The rates cover the authority’s costs of providing water and sewer services. Ninety percent of its costs are fixed, meaning they’re tied to pumping stations, transmission pipes and treatment plants.

Last February, the DWSD proposed an average 9 percent rate hike for water service for 2015-16. It set rates based on several factors, including annual sales volume and maximum day and peak hour demands, as well as distance and elevation from water treatment plants.

Last summer, officials with the state, Detroit and Oakland and Wayne counties agreed to turn over the city’s water and sewer system to the authority for the next 40 years under a deal stemming from Detroit’s bankruptcy.

The authority is overseen by a six-member board made up of one representative each from the state, Macomb, Oakland and Wayne counties and two from the city of Detroit — Gary Brown, who is also director of the Detroit water department, and Deputy Mayor Isaiah “Ike” McKinnon.

In June, the authority’s board voted to lease the water and sewage system from Detroit for $50 million a year plus about $50 million a year toward pension costs and a fund to help struggling customers pay their bills.

Also under the deal, the authority was made the water service provider for Detroit’s suburbs while Detroit residents continue to get their service from the city’s water department.

cramirez@detroitnews.com