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The Spring Hill Board of Mayor and Aldermen is considering approval of an ordinance to set fair City of Spring Hill utility rates, which will increase customers’ monthly utility bills, starting with the November 2019 bill.
Water and sewer rates (the per-thousand-gallon rates) would not change, but rather the 2,000 gallons included in the current minimum base charge would be reduced over a two-year phased approach.
Currently, the City includes 2,000 gallons of water usage within its base rate at no charge for both water and sewer minimums. The 2,000 gallons included in the minimum charge would be reduced to 1,000 gallons, starting with the October-November meter reading. After one year, the remaining “free” volume in the base rate would be eliminated, meaning all water/sewer usage would be based entirely on actual usage.
Because most residential utility customers use more than the 2,000-gallon minimum, the cost impact on a monthly residential bill will be an additional $8.21 in the first year. In the second year of the phasing out of the base rate, the same bill would increase by twice that amount - an additional $16.42 per month.
If approved, all City of Spring Hill water/sewer utility customers will receive a notice explaining the changes with their Sept. 30 utility bill.
The purpose of the adjustment is to correct operational deficiencies in the Water and Sewer Budget, following recommendations from a Cost of Service Study contracted through an outside firm.
The City of Spring Hill Water and Sewer Budget has experienced a loss for two consecutive years (Fiscal Year 2016-17 and FY 2017-18). Those losses were due to the unbudgeted expenditure related to the costs of utility relocations for the Tennessee Department of Transportation’s Duplex Road Widening Project, and inadequate accounting of depreciation the following year. Due to those losses and the expectation that revenues might fall short of expenditures during the 2018-19 fiscal year, the City hired Jackson-Thornton, a Nashville-based accounting firm, to conduct a Cost of Services Study to determine a plan for future expenses. Jackson Thornton recommended in its report the multi-year phased approach to adjusting the minimum base rate.
This adjustment is estimated to result in over $600,000 in new revenue in the water system, and over $700,000 in the sewer system in the first year. If approved, the BOMA would review the second phase of the increase – removal of the second 1,000 gallons from the base rate – prior to it becoming effective next year.
The BOMA at its Aug. 19 meeting approved the first reading of two ordinances to amend the water and sewer base rates. The BOMA again discussed the ordinances at its Tuesday, Sept. 3, work session, and will vote on the second and final reading of these ordinances at the Sept. 16 regular BOMA meeting.