Water rates may be headed up

Water rates may be headed up
Date October 04, 2005
Section(s) Local News


Newton WaterWorks Director LD Palmer travels to the city’s pumping station south of town and sees that flow rates aren’t what they once were. He sees the results, too — this year’s revenues are not meeting operating costs.

It’s easy to pinpoint why. Maytag has been using a lot less water, especially over the last two years. If current trends continue, Palmer says Maytag‘s water bills will be only 48 percent of what the city expected — $253,069 compared to $524,503. And if Maytag were to drop out of the picture entirely, Palmer said it could take a 30 percent rate increase to cover the water plant’s operating costs.

“With the uncertainty of Maytag‘s future, it may be a greater burden for the rest of the rate payers,” Palmer said.

For years and years, Maytag was the Newton water system’s largest customer. But less washing machine production means less water usage at its Newton plant. At its peak in the 1980s and ’90s, Maytag used an average of about 1.2 million gallons a day. The company was a steady and reliable customer, paying about a half million dollars in water bills each year.

But starting in 2000, Palmer noticed a blip in Maytag water usage. About 100,000 gallons less water a day was pumped from the South Skunk Alluvial Aquifer to meet Maytag‘s needs. It fell another 200,000 gallons a day the next year and then leveled out until 2003. The last two years, however, Maytag‘s usage has tumbled again.

Today, Maytag uses about 600,000 gallons of Newton water each day, half of what it used just five years ago. What’s frustrating to Palmer is that his department didn’t see the Maytag reductions coming. In November 2000, the WaterWorks completed a cost of service study that adjusted rates so revenues from its industrial, residential and commercial classes, plus sales to Central Iowa Water Association, would be as close as possible to the actual costs of serving each class. Rate hikes were implemented over a three-year period to bring costs and revenues in line.

Even so, Palmer says Newton’s water rates are low compared to other communities. For local industrial users, 100,000 cubic feet (748,000 gallons) of water costs about $902. In Altoona, it would cost $2,405; in Ankeny, $1,754. Residential rates also compare favorably, Palmer said. In Newton, 800 cubic feet (6,000 gallons) would cost a user $13.60. An Altoona resident would pay $24.20; in Ankeny $16.24.

But Maytag‘s reduced usage may force those rates up. If the WaterWorks forecast proves correct — that Maytag bills will only reach 48 percent of expected levels — the WaterWorks will face a $271,000 shortfall in revenues for the year.

How will that shortfall be made up? Palmer doesn’t know yet. A number of factors need to be considered, he said, including the Newton Speedway’s new usage, potential added sales to rural water and the up or down impacts from current or future water users. But, he warned, calculations show that if Maytag dried up completely as a current water user and other usage remains the same, changes to the current rates are assured.

“The people that are left are going to have to pick up the tab,” he said.


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