The public will
have the opportunity to comment on a proposed schedule of sewer rate hikes
at the Chesterton Town Council’s next meeting, at 7 p.m. Monday, April 22,
at the town hall.
unanimously at their meeting Monday night to set the public hearing, at the
request of Utility Service Board President Larry Brandt.
characterized the rate hikes--which would impact different categories of
customers differently--as “small increases”:
rate hike for the average Chesterton residential customer using 10,000
gallons per month, increasing the bimonthly bill from $85.84 to 88.42.
hike for the Town of Porter. Based on average usage, Porter’s monthly
payment to the Utility would increase from $56,598.10 to $59,552.34.
hike for the Indian Boundary Conservancy District (IBCD). Based on average
usage, the IBCD’s monthly payment to the Utility would increase from
$6,523.94 to $6,863.98.
hike for Fox Chase Farms residents, increasing the monthly payment to the
Utility from $98.53 to $99.18.
Brandt cited a
variety of reasons for the rate hikes, beginning with the $152,000 annual
Payment in Lieu of Taxes (PILT) which the Utility is making over to the Town
of Chesterton’s General Fund in support of the wage increases granted last
year by the Town Council to municipal employees. Porter, IBCD, and Fox Chase
Farms would not be on the hook for the PILT; only Chesterton
residents would be paying for it.
Brandt also cited
general inflationary pressure, including a 2.88-percent increase in such
operating expenses as wages, benefits, and pensions, as well as purchased
power from NIPSCO; the necessity of increasing the Utility’s budget for
vehicle replacement; and a requirement under the Utility’s agreement with
the State Revolving Fund--which provided financing for the 1.2-million
gallon storage tank to reduce combined sewer bypasses during heavy rain
events--to generate net operating revenues equal to at least 125 of its
annual maximum debt service.
“We’re well above
average in our ability to manage the Utility from a financial point of
view,” Brandt said. “But we must keep $1.2 million in cash in reserve to
cover one year’s debt.”
these increases may be, however, Brandt did make a projection about the next
biennial rate study, set to be conducted in 2021, at which time a
re-allocation of debt is scheduled to take effect. Under that re-allocation,
service on debt incurred by improvements to the collection system--which is
located almost entirely in the Town of Chesterton and serves chiefly
Chesterton properties--will be replaced by service on debt incurred by
improvements to the wastewater treatment plant itself. All categories
of customers--including the Town of Porter and IBCD--will be on the hook for
the latter, Brandt said.
Brass tacks: if
“nothing else changes” over the next two years, the Town of Porter and IBCD
could see their rates increase by some 11 percent, Brandt predicted.
Is there any way
“to soften that increase, in a stair-step fashion?” asked Member Emerson
Phasing in rate
increases has proved historically to be bad policy, Brandt replied. The
Utility Service Board has done so in the past and “learned the hard way”
that phased rate increases result in revenue losses and a depletion of cash
on hand. By way of example, the Utility is currently awaiting delivery of a
new $200,000 camera truck, an essential piece of apparatus, to replace the
30-year-old model. The Utility will pay for that new vehicle with cash on
Of the scheduled
debt re-allocation, Member Jim Ton, R-1st, observed, “It may not look like
it, but it is an evening out.”
Brandt did ask the
council--should it approve the proposed schedule of rate hikes--to make them
retroactive to April 20, two days before the public hearing, because that
day coincides with the billing cycle.
Attorney Julie Paulson said that she would have to review the legality of
The last rate hike
approved by the council took effect on Jan. 1, 2017. That hike increased the
average Chesterton household’s bimonthly bill by 5.64 percent: from $81.26