Millsboro’s 80% water rate hike ‘devastating’ jolt to Dagsboro

MILLSBORO — Town of Millsboro water customers and several beyond the town’s corporate limits, such as the town of Dagsboro, are facing a noticeable rate increase.

Residents and water users are being notified by mailed postcards that effective July 1 of this year, Millsboro’s water rate increased from $3 per 1,000 gallons to $5.40 per 1,000. Sewer rates also increased slightly.
The new rate took effect July 1, Millsboro Town Manager Sheldon Hudson said.

Even with the 80 percent water rate hike, Millsboro town leaders say the new rate remains below the norm and other municipalities in southern Delaware.

“Duffield Associates, one of the town’s engineering consultants, conducted a survey and found that the new rate is below the average rate,” said Mr. Hudson. “Private utilities, of course, tend to have the highest rates of all.”
“It is still below all of them,” said Matt Hall, Millsboro’s finance officer.
Nonetheless, the water rate increase comes as an unexpected financial jolt to the town of Dagsboro, which purchases its townwide water supply from Millsboro under a 20-year contract agreement signed in 2002.

“My budget is blown out of the water,” said Dagsboro Town Administrator Cindi Brought. “I don’t know where I am going to come up with the money at this point.”

Millsboro’s rate increase was necessitated in large part by capital and paying debt services.

Mr. Hall said the town has some “fairly old capital, like lines in the ground and everything, but then also our water plant — I think the new water plant was built in 2008. Things are where you have to start to put some money aside for that. Like I said, debt services is a big part of it, too.”

Mr. Hall made note of the overall increase of combined water/sewer adjustment.

“It’s 80 percent off just the water alone,” he said. “Our bills are water and sewer together, it’s only a 20-percent increase of the full water and sewer bill.”

Intown customers in Millsboro are billed quarterly. “The October bill will be the first billing to the majority of people at the new rate,” said Mr. Hall. “We sent out postcards to all the residents, all the water users stating what the new rates are.”

“We did that as a courtesy because we didn’t want folks to be caught off guard,” Mr. Hudson said. “It was a way for those who may not go to the council meetings to make sure they were in loop so that they didn’t have to wait until they got their bill in October to find out.”

Dagsboro’s dilemma
Dagsboro, an out-of-town user, is billed by Millsboro monthly for its water. Ms. Brought said the town just recently received its bill, followed by the postcard with the rate increase notification.

“No notification that our water rates were going to change,” said Ms. Brought. “We just raised our water rates this past year, in January, Of course, we had public workshops. We had special meetings. The public was well aware …”

According to Ms. Brought, for July of 2019 Dagsboro used 2,681,467 gallons for the entire town. Under the new rate the total bill was $14,479.92.
“At the old rate, it would have been $8,044.40, making a difference of $6,435.52,” said Ms. Brought. “It (amount) is going to change every month. This is per month. Even if the average is at like $5,000 and $6,000 more every single month …”

Conceivably, Dagsboro could be facing at an additional annual increase in water bills of $60,000 to $70,000, or more.
“Of course, every month is going to be different for us. But I have a set budget for the water department which we passed in June, starting July 1,” said Ms. Brought. “There is no way we can do that without restructuring our whole budget. It is going to have to be taken care of by the consumer – unless we come up with some big plan.”

Artesian Water Company may be an answer – down the road.
Town of Dagsboro officials in June took a formal step that in the not-so-distant future could result in tapping a new water supply source for the town and its water customers with approval of an interconnect agreement with Artesian Water Company, which is undertaking a new well system in the immediate Dagsboro area.

At Dagsboro’s May meeting, council approved preliminary site plans for Artesian’s project, which include three new wells, a maintenance building and a one-million gallon elevated water tower on property off SR 20 near the Vines Creek Road (SR 26) intersection.

“Artesian is coming in. They realize what is going on and they are doing their best to get open,” said Ms. Brought.
Mayor Brian Baull at the June meeting did note that the “agreement with Artesian doesn’t mean we are doing any business them until our agreement with Millsboro runs out.”

According to Jean Holloway, State Program Manager for Delaware/Maryland Eastern Shore Southeast Rural Community Assistance Project, the average water rate in Delaware is about $5.50 to $6, give or take small change.

“But that is a rough estimate at best without a full survey. I have seen rates as low as less than $2 and as high as $12.68 (the current Frankford rate), so the rates statewide are all over the map,” said Ms. Holloway.

Following council approval at an October 2018 meeting, Dagsboro adjusted its water rate to $4.15 per 1,000 gallons effective Jan. 1, 2019. With that rate adjustment, the town lowered is monthly fixed rate from $40 to $35.
Previously, there was a 3,000-gallon monthly allowance under the $40 fixed rate, with a $4 charge for every additional 1,000 gallons.

“I was just finally getting out of the red in the water budget by doing what we did. This is just … it’s devastating,” said Ms. Brought. “How are we going to cover this for a year, or longer, if need be? It would have been nice if we knew ahead of time before I did my budget … and passed it. So now I have no option but to pass it on to the customer. At least that is what we are thinking.”

Meanwhile, Dagsboro leaders will be scrambling to find a solution.
“I do not feel good about this because we just raised our rates. It probably will put a burden on a lot of people. And do you know who they are going to blame? Us, even though Millsboro is supplying the water and raised their rates,” said Ms. Brought. “I don’t know what we are going to do. I will have to address it with the council and the mayor. I am devastated they did this to us. They’ve got to know the budget is just blown for Dagsboro, with no warning.”

According to a survey project Ms. Holloway did for the MD-DE USDA Rural Development office over 2018-19, the average annual cost per customer for a 5,000-gallon-per-month user for selected municipalities in that survey is:
• Camden/Wyoming, $807
• Dover, $550
• Blades, $508
• Bridgeville, $282;
• Long Neck Water Company, $305;
• Delmar (Delaware/Maryland), $368

According to Ms. Holloway, using this 5,000-gallon-per-month formula, at the previous $3.00/100 gallons purchased from Millsboro, Dagsboro’s average 5,000 gallon customer would pay about $249 annually for water usage alone at the town’s $4.15 per 1,000 gallons. The annual bill would be more when the minimum bill/costumer charge is added.

“A rate hike to $5.40 per gallon that would equate to about $324 per year for usage alone,” Ms. Holloway said. “When minimum bill is added, an average 5,000-gallon per month user would go from paying about $669 per year ($35 per month minimum plus $4.15 per 1,000 gallons used) to paying about $744 for the year (provided the minimum bill isn’t increased as well.)

This is a difference of $75 or a shade over 11 percent from the rates adopted in Oct. 2018 and taking effect Jan. 1, 2019.”

Current water rates
Following is a sampling of water rates from several Sussex County municipalities.

Frankford: $12.68 per 1,000 gallons (rate was increased 48 percent from $8.75 in July 2018).

Georgetown: In-town rate, $3.88 rate per 1,000 gallons; out-of-town rate, $5.82 per 1,000 gallons. Georgetown has a $35 availability charge per 30,000 gallons to recover long-term debt, according to Georgetown Town Manager Eugene Dvornick.

Laurel: $4.25 per 1,000 gallons, plus base rate of $14.50, monthly.

Seaford: $22.61 per EDU (Equivalent Dwelling unit, which is 9,000 gallons or 300 gallons per day). User pays $22.61 a month whether using five gallons or up to 9,000 gallons, according to Seaford City Manager Charles Anderson.

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