BAY CITY, MI – Water rates could soon rise in Bay City as officials look at how to handle rising costs.
Bay City is a part of a consortium of participating cities and townships across Bay County that purchases water from the Bay County Department of Water and Sewer.
According to an agenda item presented during the Monday, June 7 Bay City Commission meeting, the Bay County Department of Water and Sewer raised the wholesale cost of water to all of the participating municipalities from $3.70/ccf to $3.88/ccf. While the City absorbed the cost of the increase for the first half of 2020, the city stated that it cannot continue to do so without a rate increase, said the agenda item.
“It is an increase from what we received as the pass-through from the Bay County Department of Water and Sewer,” said City Manager Dana Muscott.
To address the rising costs, the Bay City Commission is considering an ordinance amendment that would increase the commodity rate for water for city customers from $4.06/ccf to $4.24/ccf, or an $0.18/ccf increase.
City Fiscal Services Director George Martini broke down the impact of the increase even further on a customer’s bill when asked by the Bay City Times. He explained that under the proposed rate change, an average residential customer that utilizes 7/ccf per month of water will see their bill increase from $50.22 per month to $51.4 per month, which is an increase of $1.26/month or a 2.5% increase. He added that, if passed, the monthly rate changes would leave the service charge for a 5/8″ meter (the typical residential meter) unchanged at $21.80 per month.
The increase in rates is projected to generate $328,011 in additional revenue and the funds will cover the increased cost of purchasing water from the Bay County Department of Water and Sewer while providing additional funds for operation of the water system including the replacement of lead and galvanized services, according to the city.
These rate changes will take effect on bills rendered after August 1, 2021, if approved at the next council meeting on June 21 when the ordinance amendment is presented for a second reading.
However, the originally proposed rate increase was modified before being received by the commission. The original ordinance amendment’s increase anticipated that the city would face an additional wholesale increase of $0.10/ccf on January 1, 2022. The original proposal included a $0.23 cent/ccf total increase for Bay City utility customers.
“It’s making the assumption that we’re going to have to pass through an additional increase on January 1,” said Martini during the commission meeting.
Commissioner Kathleen Zanotti made a motion on Monday to amend the rate increase to only include a $0.18/ccf increase at this time for city utility customers, leaving the remaining increase to be discussed at a later date closer to January. No commissioners objection to Zanotti’s motion, meaning that the ordinance amendment was officially received for its first reading.
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