Metro authority OKs 4.3% water rate hike

Charles E. Ramirez
The Detroit News

Most Metro Detroit communities will pay more for water after officials with area’s regional water authority confirmed an average 4.3 percent increase in service charges.

The six-member board of the Great Lakes Water Authority approved the hike in its service charges during a meeting Wednesday. The increase, which officials said is 50 percent lower than last year’s hike, will take effect in July.

The vote was 5-1. Board member Brian Baker, who represents Macomb County, was the lone no vote.

“One of my goals is to pass on a portion of the promised savings (of creating the authority) to our wholesale customers and ultimately, the ratepayers, without impacting our excellent water quality and infrastructure,” Baker said before the vote. “I believe we have to begin to offset the burden to rate payers.”

However, Robert Daddow, the authority’s chairman and Oakland County’s representative on the board, said the service charge increase is needed to offset future costs that could come from challenges the GLWA still faces.

Among them, he said, are the expected departure of Genesee County, one of its largest customers, the collection of debt from the city of Highland Park and the expense of repairing damage to the Detroit wastewater treatment plant caused by a March fire.

Genessee County plans to leave the GLWA system in about 18 months and join the new $300 million Karegnondi Water Authority. The move is expected to cost the GLWA about $18 million in revenues. Meanwhile, Highland Park owes about $28 million in unpaid water bills, officials said.

“We have a whole series of issues,” Daddow said. “If we lower the rate this year, it just makes it harder to keep increases down next year.”

Sue McCormick, the authority’s CEO, agreed with Daddow.

“We know that we lose a major customer next year and we want to be very careful not to have a significant negative impact on (our finances),” she said. “So given all of the unknowns, we certainly don’t want to put the organization in financial jeopardy.”

This year is the first time the authority is setting rates for the region. The Detroit Water and Sewerage Department had previously determined what communities and their residents were billed.

The Great Lakes Water Authority charges for water service are a combination of monthly fixed costs and water usage. Sixty percent of what it charges a community is a monthly fixed cost and the rest is metered usage.

In March, McCormick said the average wholesale customer would likely see an average 4.5 percent increase in the charge for water service to offset a drop in the region’s usage.

Under the 2017 service charges the GLWA proposed in March, 75 of 80 communities that had previous figures for comparison were expected to see increases ranging from 0.3 percent to 20 percent for its charge per 1,000 cubic feet of water, according to a Detroit News analysis.

Among the largest increases in the proposed service charges: 20 percent for Royal Oak Township, 14.1 percent for New Haven, 12 percent for Romeo, 9.8 percent for Northville Township and 9.7 percent for Troy.

Those seeing the biggest drops were Novi, which will see a 23.7 percent decrease, and Lapeer, to drop 9.6 percent.

The authority also proposed charging the city of Detroit $15.5 million for its water service.

Meanwhile, the GLWA board Wednesday also approved an increase in the average sewage service charge of about 4.9 percent.

Initially, the GLWA predicted the charge would rise 5.2 percent, but it was lowered due to expectations that its renewed recovery efforts and work with Highland Park officials on operating issues will reduce the burden on the water authority’s other suburban customers.

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

The authority is overseen by a six-member board made up of one representative each from the state and Macomb, Oakland and Wayne counties and two from the city of Detroit — Gary Brown, who is also director of the Detroit water department, and former deputy mayor Freman Hendrix.

Also Wednesday, the GLWA board approved a budget that covers 2017 and 2018. For 2017, the budget totals $796.7 million and the 2018 budget is estimated to be $827.8 million. The authority’s fiscal year begins July 1.

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