Chemical costs, plant could push water rates

A 50 percent increase in the cost of chemicals the city uses to treat water could mean higher rates for residents.

Storms that damaged refineries and chemical plants on the Gulf Coast last year and other market factors have driven the cost of chemicals the city uses for water treatment to surge.

Last year, it cost the city about $70 to $80 in chemicals to treat 1 million gallons of water.

The water department spent nearly $70,000 for 14 types of chemicals last year and budgeted for a 15 percent increase for 2006.

So far, residents have had a reprieve from higher rates.

The city typically would pass on such increases to consumers on their water bills, City Manager Jim Ferree said. But the city is working on several projects that will delay a rate increase and also make it more accurately reflect costs when it is implemented.

The city expects to begin construction on a $7 million water plant upgrade project in the summer. As part of the financing process, the Water Resource Power and Authority will evaluate water rates to determine whether the city has the ability to repay a low-interest loan.

City officials will compare that analysis with a professional rate study, which was slated to occur this year but could be postponed.

"We're not sure if we want to wait until the new facility is built or not because the cost of production will change when it's done," Ferree said.

The city last increased water rates by 4 percent in 2003.

The flat fee for residential service went to $15.60 from $14.80 a month, and the price for 1,000 gallons was increased to $1.60 from $1.56.

The city also will re-evaluate its rate structure, Ferree said. It may investigate options other than charging a flat rate, which reflects costs to maintain infrastructure, and a use rate, which reflects costs to treat water.

Ferree said city officials would rather wait to know the cost of production instead of implementing a small increase now and changing rates again once the plant has been upgraded.

Christina M. Currie can be reached at 824-7031, ext. 210, or ccurrie@craigdailypress.com.

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