A water rate study was conducted over the last several months to advocate water rates based on the true cost of production of Minden's current daily drinking water and the possible cost of the drinking water in the future.
The study, conducted by Michael Fluhr, superintendent for the city's water plant, said that rates should be accurate, fair and balanced, but rates also could be used to promote water conservation.
"Excessive water usage could be stopped through rates if done wisely," Fluhr said.
Fluhr went on to explain that when rates aren't increased periodically as expenses go up, water systems may need to raise rates dramatically to guarantee they can meet their needs.
A significant rate hike is more difficult for customers to afford than small incremental annual increases.
The City of Minden is currently serving approximately 5,650 individual water customer accounts and water utility revenues are mostly a result from water use charges. The fiscal year 2009/2010 shows total revenue of 1.47 million dollars that includes charges of bulk water sales, late penalties, service charges and water taps.
The proposed Water Capital Improvement Program for fiscal year 2010/2011 to fiscal year 2014/2015 is projected to total 4.6 million dollars.
Capital improvements are necessary to upgrade aging distribution systems and treatment facilities.
The projects to be addressed under this program would be 2.8 million dollars for a new water storage tank, 1.3 million dollars for replacement or upgrade of the water distribution infrastructure and half a million dollars for a new water well.
"We are not in desperate need for a new water well, but some of these wells were drilled in the 1950's," Fluhr said. "I like to be proactive and look ahead to what's coming so that we aren't desperate in the future."
Fluhr said the capital improvement projects should be funded by revenue generated through water rates and he does not expect any grants for the projects.
"I do not expect any state or federal grants due to the fact that the government is having financial problems," he said. "So I don't think we can expect grants."
The water utility's annual revenue requirements consist of operating expenses from the water treatment facility, water distribution, meter readers, utilities, public works and administration.
It costs 2.43 million dollars to produce 829.5 million gallons of water. The cost of service per every 1,000 gallons of water is $2.93.
Currently, Minden residents do not pay $2.93 per every 1,000 gallons they use; they enjoy a flat fee of $4 up to 2,000 gallons of water. Any usage over that is billed at $1.95 per 1,000 gallons.
These rates would increase under the proposed plan. Review the chart to see what Minden residents pay at the current rates and what they would pay at the new proposed rates.
Other changes would include those to industrial water usage. At the current rate to receive the industrial water rate proposal, the only requirement is the business must be listed as a business.
The current industrial water rate charges a $4 flat fee up to 2,000 gallons of water per month. Anything over the 2,000 gallons is charged an addition $1.95 per 1,000 extra gallons.
The new rate would require a business to use a minimum of 300,000 gallons of water per year. The flat fee would be $25 for up to 2000 gallons per month.
Between 2,001-25,000 gallons would be charged an additional $2.95 for every 1,000 extra gallons used per month. Anything over 25,001 gallons per month would be charged $2.50 for every 1,000 extra gallons used per month.
The minimum usage would be evaluated at the end of each fiscal year. If minimum water usage is not achieved, the standard water rate will apply.
"The reason that the lower rate was put in there was to protect real high users that need it because they have to have high usage," said Mayor Bill Robertson. "But people won't strive to use it because somewhere in the middle it's a break-even type of deal. We just did that because we want to protect our businesses."
More changes list residential water outside of the city limits would be charged a flat fee of $30 for up to 2,000 gallons of water used per month. Anything above 2,000 gallons would be an additional $4 for every 1,000 extra gallons used.
All current minimum charges based on individual meter sizes will be eliminated.
Cost for installing taps would change, as well. Service call fees would change $15 for a standard service call during work hours to $25, and $30 after work hours to $50.
Fees for customer negligence or tampering with meter or curb stop will be at cost of materials plus appropriate service call fee.
Even with these increased fees, the City of Minden water system would still be one of the least expensive water systems around.
"The last time we had a water rate increase was in 2004," said Robertson. "There won't be a sewer rate increase. We don't anticipate anymore rate increases."
The proposed plan will be voted on at the next City Council meeting to be held June 6 at 7 p.m.