Farmville increases water rate by 6% for second straight year

(This is not a faith column.)

The good news is that on July 1, 2021 the wholesale cost from the Greenville Utilities Commission to the Town of Farmville only rose by 2.7 cents per 1,000 gallons of water. This was a relatively minor increase. The bad news is that the Town of Farmville, for the second year in a row, has raised our residential water rate by 6%. Why would Farmville’s town manager recommend, and Farmville commissioners approve a 6% rate increase again this year? On July 1, 2020 the wholesale water rate per 1,000 gallons rose by 14 cents. Obviously, a 6% increase for a 2.7 cents per 1,000 gallon increase in no way lines up with a 6% increase for a 14 cents per 1,000 gallon increase. The 6% increase last year already was much higher than was necessary to cover the cost of just the water. A 1% increase would have done that. What could be the explanation for this second hefty hike in our water bills, especially when the water increase was only 2.7 cents per 1,000 gallons? As you can read detailed below, the cost for actual water is only a small part of our water bills. We have to pay for the infrastructure that allows us to have water at our homes plus for the Town of Farmville employees who work to get the water and our water bills to us. Even if the GUC increased Farmville’s wholesale water rate by 6%, which they did not, a 6% increase in our total Farmville water bill would be many times more than the amount necessary to cover the increase in actual water. Below you can see how our residential water rates in Farmville already were higher than in nearby municipalities last year, before today’s 6% increase.

BACKGROUND INFORMATION FROM JULY 2020

In 2015 the Town of Farmville entered into an agreement to become a wholesale customer and to buy water from the Greenville Utilities Commission. The cost per 1,000 gallons would go up by 10 cents for four consecutive years. The starting rate was $1.61 per 1,000 gallons, then it went to $1.71, $1.81, $1.91 and $2.01 in the succeeding years. The agreement was that in 2020 there would be a rate analysis, which was done recently. On July 1, 2020 the wholesale cost to GUC from the Town of Farmville rose to $2.15 per 1,000 gallons. (The town’s fiscal year runs from July 1 to June 31.)  The cost of the actual water we get is only part of our residential water bill. The Town has to maintain infrastructure, run operations and pay personnel in the water department and in billing.

The wholesale cost per 1,000 gallons went up by 14 cents on July 1 but certain other costs associated with our water bill did not increase. For example, town employees did not get a Cost of Living Adjustment. Why did the Town increase our water rates by 6% when they had to pay an additional 5% only for actual water but not for other costs connected to the water bill? An increase of less than 5% would have covered the additional 14 cents per 1,000 gallons but the Town decided to charge us an extra 6%.

The Greenville Utilities Commission had scheduled a 6.8% increase in water rates to their retail residential water customers starting on July 1, but due to COVID decided to have no increase.  (On a related note, the Town of Winterville gave its utility customers a 10% break for two months in a gracious move to relieve some financial strain caused by COVID-19. The Town of Ayden gave its residential customers a 10% discount for two months on the electric portion of their April and May bills as well as a 1% electric rate reduction for all customers starting May 13. Residential and business customers in the City of Washington, NC saw a 30% reduction of their electric rates for the month of April to help with the economic effects of the pandemic. The Town of Farmville did none of these things.)

On May 4, 2020 in his budget cover letter David Hodgkins wrote, “Retail water rates are proposed to increase by 6% to maintain a sustainable rate structure with the loss of the water rights payments from the Town of LaGrange in FY 2019-20 and to offset a planned bulk water rate increase from the Greenville Utilities Commission effective July 1.” The bulk water rate increase from GUC is relevant but the other part of this explanation is not accurate. The Town of LaGrange completed its ten-year contract of buying water credits from the Town of Farmville in August 2018, near the beginning of fiscal year 2018-19. That was two years ago.  Actually, the Town supposedly made up for the losses of the LaGrange in fiscal year 2016-17 with an 8% increase in our retail water rates.  In May 2016 Hodgkins wrote about this increase, “These revised rates will fully fund all critical and operational and capital needs in the Water Fund without appropriating any funds from the Water Fund reserves.” The Farmville water rates also were increased in 2017-18 and 2018-19. (In the fiscal year 2017-18 the Town of Farmville transferred $663,702 from the Water Fund to the General Fund.) We residential water customers enjoyed a one-year reprieve from increases in our retail water rates in 2019-20.  On May 6, 2019 Hodgkins wrote, “No changes in the retail water rate structure are recommended at this time. Rate increases in recent years as well as continued success in securing grant funds from major capital projects have enabled the Town to build an adequate reserve sufficient to maintain a sustainable rate structure in the near term.” If the loss of revenue from the Town of LaGrange was not recouped by June 2017 it certainly was by June 2019.  LaGrange should not be mentioned as a partial cause of the 6% increase we began to see in our retail water bill in July 2020.

For some perspective you might look at the UNC NC Water and Wastewater Rates Dashboard. The website shows what residential water rates were as of 1/1/20 for 4,000 gallons. These rates were before the 6% increase by the Town of Farmville. The NC median was $30.50. Farmville was above the median at $36.25 with Kinston ($36.49) and Ayden ($34.) in that ballpark. The Dashboard shows Tarboro much lower at $17.13, Greenville Utilities Commission at $27.08, Snow Hill at $28 and LaGrange at $28.80.

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