Fraser passes water rate change based on usage

By: Nick Mordowanec | Fraser - Clinton Township Chronicle | Published August 26, 2014

FRASER — The old adage “you get what you pay for” is now in effect in Fraser.

More specifically, city residents are seeing a change in their water rates after City Council unanimously approved the adoption of a $13.30-per-unit price for water, sewer and ready-to-serve, or RTS, charges.

RTS charges are fees calculated whether water or sewer service is used or not, and they were used to create people’s bills. However, in this new system, residents and businesses are given a per-unit rate that is based on their own consumption, eliminating charges based on usage history.

The rate adoption means that the method of making residents pay a monthly minimum, whether they used a little or a lot of water, is no more. This consumption-based system offers residents the freedom to use as many units of water as they wish.

The $13.30 price is the sum of the total fixed costs of water, sewer and RTS rates — the fixed cost of water is $2.20 per unit, the fixed cost for sewer is $5.10 per unit and the fixed RTS cost is $6.

This consumption-based system was approved to help alleviate the angst many residents felt about their rates over the past year or so, making residents fully responsible for directly impacting their own bill. Finance Director Tim McCulloch said the new usage rate has changed the water conversation from being confusing to something straightforward, with bills impacted by the actions of homeowners and businesses in the community.

The city used to base rates on an average of 12 months, but now RTS charges will be based on use the previous month.

“We’ve had the RTS charge for five years,” McCulloch said. “A change was made because it was confusing at times for the residents and business owners to understand. It was a fixed amount and got confusing for them on where the amount came from. There were lots of questions on a monthly basis, and they wanted amounts looked at again and re-averaged.

“If a person lived throughout the same house over five years, it was just the average. A problem was with temporary housing (like rentals) and some people felt they didn’t have control over the amount.”

The $13.30 rate was derived from the Detroit Water and Sewerage Department and Macomb County-based rates; loans and debts that need to be paid; administrative overhead based on actual billing of water; the time it takes for the Fraser Department of Public Works to maintain the system; and working with engineers on pipeline-based projects.

City Manager Rich Haberman said during the Aug. 14 meeting that the common theme the city picked up was tied within the complaints received through the water department: confusion did not really exist over the RTS charges; rather, it was how the city calculated those charges using different usage-based formulas.

Haberman said that the change should make those in the community much happier, offering a simple approach and resolution to what has definitely been a provocative topic of discussion.

“I understand water rates and the cost of water, but if you look at Detroit  … the water bills even there — and they’re paying lower rates than we are — are not much worse than what we’re dealing with in terms of same volumes. Clinton Township just did their water rates. Their minimum is $45, and they’re paying $45, whether you use (the units) or not.”

Councilman Mike Carnagie said he probably uses more water than he should, but he said he pays for what he uses.

“We finally came up with a number to make it simple for everyone: Pay for what you use,” Carnagie said.

How rates will be impacted in the future based on uncertainties in Detroit is still undetermined, but this current format — which was heavily discussed between City Council and the Finance Department in January of this year — is expected to draw positive feedback from residents due to its simplification of the rates and the process as a whole.

McCulloch said residents have spoken to him and have provided positive feedback thus far. However, rates are always being calculated, and this particular rate is no different. Most rate changes will take place in May when the budget is determined.

“We’ll evaluate where we’re at mid-year through our budget year, so we’ll look in January that we’re hitting the amounts we need to hit,” he said. “The philosophy is not expected to change anytime soon, but the rate amount itself is always evaluated.”