Fixed and usage: Dagsboro council OKs water rate adjustments

Dagsboro councilman Patrick Miller looks on as Jean Holloway, Delaware/Maryland state manager for Southeast Rural Community Assistance Program Inc., shares the rationale for her recommended fixed and water usage rates. (Delaware State News/Glenn Rolfe)

DAGSBORO — Slight savings may loom over the New Year’s horizon for low-volume water consumers in the town of Dagsboro under a new fixed/usage rate structure geared to address a projected water operations deficit.

Following a public hearing, town council by a 5-0 vote Oct. 22 approved a monthly fixed rate decrease from $40 to $35, and a usage rate increase from $4 to $4.15 for every 1,000 gallons.

Under the amended resolution, new rates go into effect Jan. 1, 2019.

Previously, there is a 3,000-gallon monthly allowance under the $40 fixed rate, with a $4 charge for every additional 1,000 gallons.

The new fixed rate does not include any usage allowance.

The public hearing and council’s action followed a presentation at council’s September meeting by Jean Holloway, Delaware/Maryland state manager for Southeast Rural Community Assistance Program Inc.

“You were coming up consistently with a deficit. At the current rates my calculation was that you would have about a $17,000 deficit,” said Ms. Holloway in recommending the proposed adjustments. “This is kind of a standard rate-setting methodology to have a fixed charge to cover fixed cost, in this case debt service and reserves, and then a variable charge to cover the variable costs.”

“In my calculations I found that your $40 fixed charge for everyone was a little bit high. It was covering more than what your fixed cost warranted. I suggested reducing that to $35 or $30, and increasing the variable rate, the volume charge slightly more,” said Ms. Holloway. “In terms of eliminating the gallon allowance that is something that I commonly do unless a town or a community insists on having a gallon allowance. For one thing it promotes conservation and it is also a more equitable way to spread out the costs of providing the water. For those who use very little water it will actually save a little bit of money.”

Dagsboro councilman William Chandler III supported the recommended adjustments, saying “there is a problem with just the status quo. Jean (Holloway) has explained to us that you cannot just live with status quo. If you do we’re going to increasingly grow our deficit. And if you do that you’ve got very little options. We’re running a deficit. Jean has done an analysis.”

“It’s both more equitable,” Mr. Chandler said. “It’s fairer to those who are on the lower end of the user scale. And according to Jean’s statistics that is the majority of people in Dagsboro. The system right now penalizes them. It punishes them by forcing them to pay more and effectively subsidize folks who live here fulltime with big families who are washing clothes, watering their lawns … like I am.”

Most of the half dozen or so residents who spoke at the public hearing expressed opposition and/or concerns.

“I’m OK with whatever you guys decide to do,” said Jim Thompson. “But I’m a little confused because in the agenda it doesn’t say what is happening to the first 3,000 gallons. If the first 3,000 gallons are included in the base rate, then I’m all in favor of it. If they are not it basically is going to be a rate increase.”

“It’s $4.15 per 1,000 gallons, so there is no limit that starts at 3,000 gallons,” said attorney Greg Morris, Dagsboro’s new town solicitor.

Mr. Thompson said in his opinion that translates into a rate increase. “Take the average 3,000 gallons user,” Mr. Thompson said. “Right now, that person is paying $40 a month and is paying zero for the (first) 3,000 gallons. Am I right? Now, you are going to reduce the rate from $40 to $35. You save $5 a month. But that 3,000-gallon user is now going to pay $12.45 more for water, so that is really an increase of $7.60 for the average user.”

“After hearing the presentation, I am in favor of this change,” said resident Cathy Flowers. “I think it will really be beneficial to those people who don’t use a lot of water. And it won’t change the rates much for those of us who use the normal 3,000 gallons.”

In opposition was Piney Neck Road resident Nancy Marvel, who shared her family’s water woes with town leaders.

“I’m against the rate increase. I have the worst water that you can possibly get. We just raised the rate increases for taxes a couple years ago and now you guys want to raise the rates for water,” said Ms. Marvel. “I have got terrible water. Nobody seems to care to fix mine. They won’t put a circulator on it. I’m at the end of the line. I would be paying for stuff … and I have to buy bottled water every day. I have to have the bottled system in my home. I pay that monthly because I can’t use town water.”

Council members and Mayor Brian Baull concurred. It was suggested that assistance be sought from Artesian Water Company and at Ms. Holloway’s suggestion Delaware Rural Water.

“Nancy and Eddie obviously shouldn’t be paying for something they can’t use,” said Mr. Chandler. “So, the solution to that is get Artesian in here and find out how to fix that. Put in some kind of equipment. Do some kind of regular flushing that will cause that problem to be solved.”

The town of Dagsboro receives its water through a December 2002 agreement with the town of Millsboro.

Dagsboro’s last water rate adjustment was in 2012.

The new rates will be reflected in customer water bills generated monthly, starting at the end of January, according to Dagsboro Town Administrator Cindi Brought.

There was an inquiry about going back to quarterly water billing instead of monthly as a possible cost-savings to the town. Quarterly billing was changed to monthly before the current town officials were in office.

“The reason we did change from a quarterly billing to a monthly billing is because we had people … come in and complain to us that they couldn’t afford the big bills on a quarterly basis. They had to budget for just a monthly basis,” Mr. Chandler said. “So, you’re damned if you do and damned if you don’t.”

“I know that none of us were here on council when that happened before, but from what I know that was a big can of worms,” said Mayor Baull.

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