Local residents will welcome in the new year with higher water
rates set to begin in January.
Local residents will welcome in the new year with higher water rates set to begin in January.
The cost of water will rise 2 percent and Morgan Hill’s perchlorate surcharge will rise another 5 percent.
Once the new rates take effect, residents will have seen water rates increase a total of 6 percent since the program began in 2003. The perchlorate surcharge, which reimburses the city for perchlorate cleanup inside the city, has risen 15 percent since April of 2004.
Finance Director Jack Dilles told the city council on Wednesday that a typical single family residential customer who uses 19 units of water will see their average monthly bill increase by $2.44 to $39.27, while a typical multi-family customer who uses six units of water will see their average monthly bill rise by 82 cents to $13.21. Commercial and industrial customers will also see their rates go up by 7 percent.
Dilles explained the city needs to increase water rates and the perchlorate surcharge again because the water fund balance has been decreasing each year because the city has had to spend money on perchlorate clean-up.
“At the end of June 2005, we spent $1.5 million more than we’ve taken in revenue. To get to zero by June 2009, we need the 5 percent surcharge in January of 2006. It may not be necessary in January of 2007,” said Dilles.
Dilles said if another 5 percent perchlorate surcharge was considered for 2007, this would bring up the increase to a total of 20 percent since it was first implemented last year.
Since 2001, the city has spent $2.6 million on perchlorate clean-up due to the exploring and drilling of new wells, treating perchlorate-laden water, and costs to lawyers and technical experts. Perchlorate-related costs have exceeded revenues by $1.3 million through June 2005.
“The total cost (of the clean-up) is projected at about $5 million that needs to be recovered. That’s a lot,” said Dilles.
Dilles said the city is supposed to receive reimbursements from the Olin company, which is largely blamed for the perchlorate pollution in Morgan Hill. Though the reimbursements are still to be determined, the city’s goal is to recover all costs of the clean-up.
The 2 percent water rate will add another $124,000 more in revenue for the city per year, while the scheduled 5 percent perchlorate surcharge will bring in approximately $312,000 per year.
