The Macon Water Authority’s highest rate increase in recent years takes effect next year, but it still won’t be enough to sustain the system in the future, financial experts say.
Over the last five years, incremental 25-cent increases to the rate the authority charges for the amount of water used failed to generate enough money to offset inflation and keep the system financially afloat, according to a recent financial analysis by Jacobs sustainability consultants.
Beginning January 1, instead of the 25-cent rate hike that would have added an additional $1.75 in charges for the typical residential customer, the monthly bill now is expected to increase $12.46 for those using about 5,000 gallons of water. Commercial users will see even higher increases.
The Authority also approved increasing customers’ base rates for water and sewer charges by nearly a dollar for five-eighths of an inch meters, and higher hikes for larger commercial lines with up to $45.63 more per month for 10-inch meters.
The volumetric charge per CCF, or 100 cubic feet of water used is going up 75 cents across the board for water and sewer fees. The average residential customer uses about 7 CCFs each month, which amounts to an extra $4.20 per bill.
Part of Jacobs’ presentation included an interactive dashboard that shows how Macon’s utility compares to others like it in Georgia. The Macon Water Authority is priced cheaper than most all others. Similar systems like the Clayton County Water Authority have had significant rate increases over time.
In recent years, Clayton enacted consecutive increases of 10%, 5%, 3% and 8% before leveling off to 2% the last couple of years, said Jacobs’ Jason Bodwell.
Last year, the average Clayton County customer paid $70.12 a month for water and sewer, compared to $55.86 for Macon Water Authority, according to the latest figures on the dashboard.
‘Have to do what’s necessary’
MWA Finance Committee Chair Dwight Jones said the Authority’s strategy to hold down rate increases in recent years to not burden those near or below the poverty line has been “woefully” inadequate.
“We’ve severely financially jeopardized the sustainability of this institution. And nothing in my running for office, speaking for me, nothing in my oath of office says I’m committed to cheap rates,” Jones said. “First and foremost needs to be the sustainability of this institution, and so our prior actions have cost us dearly.”
Many residential ratepayers already have seen increases in bills after new meters with Automated Meter Reading, or AMR, were installed. MWA technicians said the old mechanical meters were not giving accurate readings resulting in customers using more water than they were billed for.
Desmond Brown, the only board member voting against the 2025 increase, said he wanted to wait until the Authority determined how much extra revenue was coming in due to the greater accuracy.
MWA Executive Director Ron Shipman noted that Jacobs used those recent revenue and budget figures when conducting the financial analysis. Shipman also said there are too many variables with the age of meters at replacement, variations in water usage and other factors to accurately make an assessment.
The Authority still plans to upgrade its commercial meters and install Advanced Metering Infrastructure, or AMI.
“Doing this is not even going to be the savior,” MWA Vice President of field and plant operations Michel Wanna told the board at its Nov. 7 meeting.
Chemicals, supplies, equipment and transportation costs have risen exponentially since the COVID-19 pandemic. Although prices may stabilize, MWA Chairman Gary Bechtel does not expect expenses to go down.
“We have to do what’s necessary to make certain that we can maintain this system to the level that our customers expect,” Bechtel said.
As one example, Wanna and Shipman pointed to the one-ton chlorine cylinders the authority changes twice a month.
“A chlorine cylinder prior to the pandemic was $800, a one-ton chlorine cylinder. It’s over $4,000 now. We put on 10 at a time and we go through them pretty regularly,” Shipman told the board.
Wanna emphasized the predicament.
“The chemicals, I sent you all a very detailed look. You all have seen it went up 10 to 12 to 15 times,” he said. “Doing business at this time with our rate, we can’t sustain it.”
Wanna also pointed out the cost of shipping, vehicles and fuel also has escalated.
Frank Patterson, the longest-serving board member, said he has alway fought against “any real big increase,” but does not see a way out this time.
“We’ve got to bite the bullet and say, ‘Folks, this is the way it is. We don’t have any choice,’” Patterson said. “And that hurts me to say that, but I can’t fight this one.”
Last month during a rate structure workshop, Jones cautioned against letting politics get in the way of sound financial management.
“If I make a decision here and it costs me an election in the future, that’s fine,” Jones said. “Our job is to maintain the sustainability of this organization for the benefit of our ratepayers, as affordable as we can. But if we as board members focus on political expediency, it’s the kiss of death. This institution is not going to be here, or we’re gonna have rate increases so exorbitant because of our lack to act, and our self-preservation of being in office. It’s a no-win situation.”
New rate plan expected by 2026
While the Authority recently secured a $113 million bond deal for 10 major capital improvement projects, future expansion of the Rocky Creek Water Treatment Plant could cost an additional $300 million.
Although the Authority secured great rates in the recent deal, its bond rating slipped a bit due to not having long-term financial plans in place.
Under that bond agreement, MWA must keep 270 days of expenses on hand. Plus, for every dollar in bonds, $1.20 of net operating income must be available.
If the authority were to get a similar bond deal for the $300 million project, that alone would require an estimated $40 a month more from customers to pay the debt service, according to MWA’s financial consultant.
The 2025 increase is not expected to be near enough to meet the future needs of the Authority.
A chunk of wooden pipe mounted on a pedestal outside of Shipman’s office reminds him that parts of the system are over 200 years old. The cost of maintaining the infrastructure and replacing crumbling pipes has to be factored in.
“One of the things I do look forward to is a more comprehensive view of our rate structure,” Bechtel said.
Jacobs will continue a deep-dive into MWA’s financial future and present more recommendations next year for future increases.
The Authority is considering modeling cities like Atlanta, which charges higher water rates for customers that use the most water. While the mandated practice in the Atlanta metro area is designed to encourage conversation, tiered rates also generate more revenue.
Another option to offset future increases for those who are on fixed incomes and use very little water would be to include a measure of water in the base rate. That change could actually lower bills for those ratepayers.
Macon-Bibb County Commissioner Bill Howell said he has a problem with “kicking the can down the road any farther” and motioned for approval of the 2025 rate increase.
“Letting this authority go broke or get in a position where we’re in a bad financial place with bonds and other things, I just can’t do it,” Howell said. “It’s not popular to raise rates, I understand. We’re not raising to be the top authority in the state, but I think we’re getting more in line than where we’re at.”
The Authority’s customer service department will be prepared to answer questions and address concerns from the public in the coming months.
MWA is setting priorities for work going forward and will continue to try to keep costs down, Shipman said.
Through negotiation, the Authority was able to knock down the projected 37% increase in insurance costs to 11%.
“We’re not trying to do anything special here. We’re trying to keep the system going for the future of this town, the Macon Water Authority and surrounding areas,” he said.
— Civic Journalism Senior Fellow Liz Fabian covers Macon-Bibb County government entities for The Macon Newsroom and can be reached at [email protected] or 478-301-2976.
