The Sturgis City Commission has approved rate increases for both city water and sewer services.

The adjustments approved Wednesday evening (April 21st) are designed to generate an additional 9.5 percent increase in revenue for each of the water and sewer funds over a 12-month period.  The impact from the increase to the average residential customer in the city is approximately $1.50 to $2 increase on monthly water bills and $2 to $4 on monthly sewer bills.

According to a news release from the city, the rate increases are in part a response to reduced water consumption and sewer usage by residential and business customers at the same time as fixed costs for the system have continued to increase.  In 2005 the city commission contracted a rate study for both funds and approved rate increases phased in since that time to provide revenue to match expenses as well as to accommodate necessary capital projects and system improvements.

Despite the planned rate increases, revenues in the water and sewer funds have only held stable over the past three years in the face of increasing expenses, leaving them short of the rate study’s financial targets.  According to the study’s recommendations, water rates were to increase 8.5 percent and sewer rates 4.5 percent this year.  Based on an update of the projections, city staff recommended the 9.5 percent increase in both water and sewer rates.

To achieve the 9.5 percent increase, changes to the flat customer charge and per-1,000 gallon commodity rate were adopted.  Water rate adjustments will be seen in the customer charge, while the sewer customer charge and commodity rates will be adjusted.  City staff also indicated further rate adjustments were likely to be brought before the Commission in the coming years.

With the sewer fund running an operating loss last year and the water fund required to borrow to fund normal capital repair and maintenance expenses, city staff indicated both funds have reached a point where rate adjustments are critical for the long term.

City Manager Michael Hughes said, “This adjustment is a financially responsible approach to a rate structure that can meet expenses now and in the future.”