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Posted: 07/09/14

Washington approves utility
rate increases

by CHRIS GRAY
Observer Staff Writer
      Washington Township residents will have water and sewer costs from Detroit and Macomb County passed down to them starting this month.
       At a special meeting held June 30, the Washington Township Board of Trustees voted 6-0 to increase water and sewer rates as of July 1.
       Trustee Harold Miller was not present for the meeting.
       Residents will see water rates increase by 4.5 percent, while sewer rates will increase by 9.5 percent. Supervisor Dan O'Leary said the increases average out to 7 percent, which is on par with prior utility rate hikes.
       "The sewer rates are higher than we like to go and the water rates are lower than we have been going," he said.
       He said the township is approaching the costs with a fixed model as opposed to variable pricing. Fixed costs are those associated with running a pipe to a building, while variables are for the amount used.
       The changes will be seen on the October bill for residents. O'Leary said the increases stem from changes from the Detroit Water and Sewerage Department (DWSD) and Macomb County trying to improve its systems.
       "Once we get from them what they're increasing to us, then we run it into our model with our projections to see what it means to our customers," he said.
       Without the increases, the reports indicate the township would fall below mandates or target rates for debt coverage ratio, minimum cash reserves and optimal net income.
       "It's not wasteful spending . . . this is spending that should've been done by Detroit all those years they owned the system and they didn't do it," he said. "It's expensive, but it's the right thing to do."
       Not all of the costs are top-down, though. Some of the 9.5 percent sewer increase will help fund repairs to the township's systems. In addition, the water rate takes into account the township's water tower, which will begin paying dividends in the later years of its 2014-18 projections.
       However, a project proposed by Macomb County Public Works Commissioner Anthony Marrocco could reduce those costs. If built, the county sewer line would extend on Hayes Road to 32 Mile Road. O'Leary said the project would eliminate capital costs projected in the rates.
       "We're kind of counting on it, but we can't set our rates assuming that because there is not commitment yet from the county," he said.
       The pipeline could be years away, so O'Leary said the township will likely move ahead with its plans to construct a wastewater treatment plant.
       O'Leary said the plant could cost $10 million, but can be constructed in stages. The treatment plant would provide sewer to sections of the township that don't receive it.
       "We're going to wind up building our facility as a stop-gap, and then we'll shut it down when the pipeline comes," he said.
       He said the township will meet with the Department of Environmental Quality this month to continue the process of gaining the proper permits for the plant. The facility would take a year and a half to be built and operational once the permit is issued.
       "We're very likely to built a 250,000-gallon tank initially and only spend $2.5 million," O'Leary said. "This way if he (Marrocco) comes and brings the pipe, we shut it down and at that point we've made that money back with tap fees."
       Observer Special Writer Jerry Fraeyman contributed to this report.


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