Base rates on monthly sewer bills for at least 2,600 businesses that get service from the city of Columbia are skyrocketing.
The new rates – imposed only on the first 2,250 gallons of usage, not the entire sewer bill – jumped this summer by 57 percent to as much as 28 times for the largest customers compared to rates they had been paying for years.
The beneficiaries of the restructured rate system are residential customers.
The typical residential user’s base rate rose by 83 cents per month, or 16 percent, if that household is inside the city limits. The same bill – for using 800 cubic feet of water, or 6,000 gallons, per month – is up less, 92 cents per month, or about 10 percent, for those who live in Richland or Lexington counties. Sewer bills are based on water usage.
While small, those increases might irritate property owners, who also are paying higher fees starting this summer for managing flooding problems, parking and traffic violations and other services from the city of Columbia.
A manufacturing plant association complained last week that the sewer rate increase adds to the perception that the capital city is less than business-friendly.
“There’s not a lot of confidence right now about the business climate in the city,” said Lewis Gossett, president of the S.C. Manufacturers Alliance, which speaks for executives at 400 plants around the state, including in Richland and Lexington counties.
The change in how rates are structured is intended to shift costs to customers who use the most water and therefore put the biggest demand on the sewer system, according to the Florida consulting firm the city hired to suggest a range of changes in its sewer and water rates.
Sewer rates for usage beyond base amounts are rising at much more slowly. In-city customers are paying 6.2 percent more for every additional 750 gallons. Sewer customers outside the city might not notice an increase that is less than one-half of 1 percent.
City officials did not send notices in monthly bills explaining the change in the way bills are calculated, Columbia’s director of utilities and engineering, Joey Jaco, said last week.
He said the city has received no more complaints than usual whenever rates are raised.
Ike McLeese, director of the 1,600-member Greater Columbia Chamber of Commerce, said he’s received one inquiry from a business.
“When people sit down and start absorbing the percentage increases, I may start getting more calls,” McLeese said.
Businesses comprise about 9 percent of the city’s 72,000 water and sewer customers, according to Jaco.
The new rate structure on both sewer bills took effect July 1 and is showing up on August bills.
‘Revenue that is needed’
The base-rate hike comes after the city’s first rate analysis in five years.
Columbia does such studies every five years, Jaco said. The previous one resulted in water and sewer rate increases of 5 percent in 2007; 5 percent in 2008; 2 percent in 2010 and 5 percent in 2011, Jaco said.
This year’s rates were set to generate $50.5 million more revenue during the fiscal year that ends June 30, 2013, because that is what the city expects it will take to maintain and grow the system, said Daryll Parker of Utility Advisors Network in Tampa, Fla., which did the current analysis.
“We’re not trying to generate more revenue (for a surplus),” Parker said last week. “We’re trying to generate the revenue that is needed.”
He said his firm applied rate structures recommended by the American Water Works Association, which researches rates and sets standards across the country.
Jaco also said scrutiny from the federal Environmental Protection Agency and the U.S. Justice Department is a factor, although not the driving force in the amount of money the city is spending to improve its water and sewer systems.
Regulators raided the city’s primary sewer plant in 2008 after complaints of falsified wastewater treatment records and illegal sewage discharges into the Congaree River. No criminal charges were filed, but the city still is negotiating to avoid other penalties.
For at least two decades, homes and businesses paid the same base rates, Jaco said.
The only variable was whether they were inside the city. Until July 1, the in-city base rate had been $5.17 per month for all customers. The out-of-city rate for all users had been $9.28.
The industries hit hardest by the latest increases are those with large, 10-inch water lines. Those lines can carry up to 65,000 gallons per minute, Jaco said.
For those in that group of customers who are located outside the city limits, the new base monthly rate is $255, compared with the previous, long-time rate of $9.28. In other words, the out-of-city rate rose by $245.72, or 261/2 times. The businesses with 10-inch lines that are inside the city, the monthly rate shot up by $144.83, or 28 times.
Jaco’s department could not readily supply an example of the largest users Friday; there are 15 of them, according to city records.
Gossett, who speaks for manufacturers, said plant officials may not have picked up on the increase yet because water and sewer bills fluctuate often. It might take a while for the source of the increase to become apparent.
“When the bills start to hit and they get processed (through finance departments), that’s when the CFOs start calling,” Gossett said of chief financial officers at the plants.
Even if the impact is not huge on plants’ bottom lines, the rate increase is “still a bad signal to send” on top of significant increases in business license fees a few years ago and other rising operating costs such as electricity and state unemployment taxes, Gossett said.
The next-hardest hit by the city’s increase are the 116 customers that have 8-inch lines. Those include firms such as the Pepsi soft drink bottling plant on North Main Street near I-20, hospitals and mid-size to large shopping centers, Jaco said.
Their base rate ballooned by $90.83 monthly, or 171/2 times, for in-city locations. Outside the city, their rate jumped by $153.92, or 161/2 times.
Customers who have 6-inch lines – a total of 378 users – are paying $54.80 more, or 101/2 times more monthly, if they are located within the city limits. Those in unincorporated Richland or Lexington counties are up by $92.72, or 10 times more. Businesses such as Shaw Industries, a fibers manufacturing plant in the St. Andrews/Seven Oaks area near Irmo, have water lines of that size, Jaco said.
Customers with lines ranging from 4 inches to 2 inches are getting monthly bills that rose between 21/2 times and 57 percent, respectively, depending on where they are located, according to the figures.
Customers with lines of that diameter total nearly 2,100 and range from firearms maker FN Manufacturing, whose largest line is 4 inches, to homes with large yards and extensive irrigation systems that require 2-inch lines, Jaco said. Also included would be any building that has a sprinkler system for fire safety.
City leaders want to raise $500 million through 2017 to run and improve the $844.3 million water and sewer system, said Jaco and Bill Ellis, the city’s chief financial officer.
About 80 percent of that total would come from ratepayer-backed bonds. The other 20 percent would come from what’s left after paying operating costs and debt.
To raise those half-billion dollars, more rate increases are proposed for each of the next four years. The overall hike planned for July 1, 2013, is 7.6 percent. The overall increases would range from 7.3 percent to 8 percent during the other three years.
But City Council would have to vote on those increases and might not accept the consultant’s recommendations.
Reach LeBlanc at (803) 771-8664.