Broad River Water Line May Bring Rate Hikes

WINNSBORO (Jan. 8, 2016) – Rising water and sewer rates have been a fixture in the Town of Winnsboro’s annual budget in recent years, yet the utility has struggled to break even, borrowing money from the gas and electric departments. But with the Town’s ambitious Broad River project scheduled to break ground this spring, and with a $14 million loan from the S.C. State Revolving Fund approved in November to pay for it, water and sewer is going to have to do better than break even.

And water and sewer rates are likely to climb at a consistent rate into the next decade.

“The whole goal is to get (rates) up to where all the utilities would be self-sufficient,” Town Manager Don Wood said, “rather than one having to rely on the revenues from gas and electric to make everything balance.”

Town Council voted unanimously Tuesday night to accept the recommendations of a rate study conducted by the Willdan Group that would bump water rates up 4 percent each year beginning July 1, 2016 through the 2019-2020 fiscal year. Rates would increase 5 percent in the 2020-2021 fiscal year.

Sewer rates would increase at 7 percent a year through 2020, with a 5 percent increase in 2020-2021.

“We’re doing this bond to get to the Broad River to ensure we have enough water, so a significant amount of that revenue has to come from water and sewer,” Winnsboro Mayor Roger Gaddy said. “You can transfer some from the other utilities, but you’ve got to have a certain amount of it from water. We looked at the rates and we’ll increase the rates some at what we think is a tolerable level … so that we can make sure that we generate enough revenue to satisfy the State Revolving Fund people.”

But although Council voted Tuesday to accept the study, the increases won’t become a reality until Council votes to incorporate them into next year’s budget.

“We accepted the study and the rate increase,” Gaddy said, “but we’ve still got to do the budgeting process, which means they (the rates) could still be off.”

The Broad River pipeline is expected to bring approximately 1 million gallons of water a day into the Town’s reservoir. The $14 million Revolving Fund loan carries an interest rate of 1.88 percent.

Wood said the Willdan study cost the Town $40,000.

If the Willdan rate increases are implemented, the water system is projected to have a final balance at the end of the 2020-2021 fiscal year of $163,513 – a monumental increase from the projected 2016-2017 loss (without the rate increase and without fund transfers from gas and electric) of $102,291.

In the first year alone, the recommended rate increase is expected to turn the $102,291 loss into a $129,249 gain, again without fund transfers from other utilities.

The sewer system, without the rate increase, is projected to lose $88,303 in 2016-2017, even with a fund transfer of $700,000. With the increase, and including the projected fund transfer, the system is estimated to come out $22,887 to the good.

As the rate increases continue, and the fund transfers decrease, the sewer system is projected to come out $21,793 ahead by the end of the 2019-2020 fiscal year. That includes a projected fund transfer of $100,000 from other utilities. In the final year of the increase scale, the sewer system appears to be in the negative once more by $55,763; however, that figure includes no fund transfer. And, when combined with the water system’s gains, the entire system would be $107,750 in the black.