City Utilities CEO: Rate increases coming
Fort Wayne City Utilities’ CEO told the Board of Public Works Wednesday that rate increases are coming as the board adopted the utility’s 2017 budget.
The nearly $140 million budget is entirely supported through rates paid by City Utilities customers and includes the utility’s capital and operating budgets, City Utilities CFO Justin Brugger told the board. Brugger said the utility was able to cut operating expenses by 1 percent for 2017. The utility’s total operations budget for 2017 is about $64.9 million, while the capital budget is about $73.9 million.
Cutting operating expenses was accomplished by monitoring electricity, energy, power consumption and chemicals, Brugger said.
“All of those things are operating costs that affect rates ultimately and we were able to closely look at those this year and find some efficiencies and reduce cost,” Brugger said.
City Utilities’ 2016 budget included $122.8 million in capital expenses and $68.5 in operating costs.
“The capital portion staggers every year and it can fluctuate, based on scheduling and such,” Brugger said. “Capital will be a little bit lower this year than last year due to those timing cycles.”
By the end of 2017, City Utilities will be more than halfway through the unfunded consent decree from the Environmental Protection Agency, which required the city to dramatically reduce the number of combined sewer discharges into the St Marys River. The utility will also move forward with the planned Deep Rock Tunnel, which once completed will significantly aid in reducing the number of sewer overflows, by directing stormwater directly to the utility’s holding ponds. The utility also plans to continue upgrading infrastructure and drainage while integrating and expanding the use of technology in its operations.
City Utilities is entirely funded by ratepayers, including expansion and improvement of the system’s infrastructure, CEO Kumar Menon said. Expansion, Menon said, means the utility can stave off or minimize rate increases for a period of time. However, Menon stressed that rate increases are unavoidable, especially as the system ages.
“We’re one of the few utilities in the country that have had all those awards that we have won, plus we’re one of the few utilities in the country that has been able to minimize rate increases,” Menon said. “I want to make this crystal clear. Rate increases are going to be a part of our life moving forward. We cannot do without because our assets are aging at a faster rate and if we can’t keep up with that, we’re going to have some catastrophic results.”
However, Menon said there has been tremendous support from the City Council, Mayor Tom Henry and the community when it comes to the utility’s financial needs.
The utility is very conscious about asking ratepayers to contribute more money, which is why alternative revenue sources are constantly being explored, Menon said. The goal, he said, is to minimize the impact of those increases. Examples of cost-savings include reduction of power consumption through methane gas and leasing space on the city’s water towers to cell phone companies.
“The goal is to tamp it down as much as we can to keep it to single-digit increases,” Menon said. “As long as you telegraph it well, as long as you minimize the impact, I think people realize the need for it.”