A recent joint meeting of Lebanon Utilities Board and the City of Lebanon City Council reviewed seven scenarios that would address the current shortfall in funding for the forecasted five year $6 million operating and capital budgets for the wastewater utility.
The shortfall is partially a result of simple cost of living increases since the last rate change in 2005 as well as an increased need for improvements to existing infrastructure in order to maintain increasingly stringent environmental waste handling guidelines imposed by the State. This rate increase would help the utility catch up with the current inflation rate and accommodate the more expensive waste processing guidelines that have gone into effect.
“For the last several years during our annual budget process, Lebanon Utilities has made it known that a wastewater rate increase was eminent. While both water (2010) and electric rates (2012) have had increases in recent times, wastewater has not had an increase since 2005,” said Jay McCoskey, general manager for Lebanon Utilities. “Nonetheless, we have been reticent to burden our community during times of economic challenge – and we certainly didn’t want to pass along all of these increases at once.”
Those seven scenarios range from a 26 percent to a 49 percent increase and factor in financing options within the budget as well as re-examining Payment in Lieu of Taxes (PILOT) program, according to McCoskey. PILOT is allowed by the State and sets a formula for entities like Lebanon Utilities to pay to the City the equivalent of what a private business would pay in taxes (for land and improvements as well as equipment).
“In the past, this has been a financially prudent approach. However, that number has increased from $40,000 in 2010 to more than $200,000 in 2015. If the City was not collecting this annual amount from the utility, our wastewater rates could be reduced by approximately 5 percent,” he said. The City Council is currently evaluating the impact of collecting a lesser amount than what they are now collecting through PILOT.
In addition, the Lebanon Utilities Service Board will also review whether to repay a loan from the Water to Wastewater Utilities of almost $1.4 million over a five year period or continue to repay the loan from Wastewater Availability Fees collected when new customers hook onto the Lebanon wastewater system.
“By not paying off the $1.4 million over the five year period, Lebanon Utilities could save approximately another two to three percent from the proposed rate increase,” said McCoskey. The Lebanon Utilities Service Board is currently evaluating that option relative to the impact of future water rates.
A draft Resolution for a recommended increase will be considered by the Board at their regular meeting on October 7 with final vote for City Council consideration to come in Utility Board meeting on October 21. City Council would then need to approve any proposed rate increase. It is the recommendation that any new rates would go in to effect on or before January 1, 2016.
About Lebanon Utilities
As a locally owned and operated utility company, Lebanon Utilities is committed to its community’s safety and wellbeing. Sensitive to the environment in which we live, Lebanon Utilities is focused on providing the most reliable, cost-effective and responsive services possible in an eco-friendly manner. Lebanon Utilities provides electric, water/wastewater services as well as high-speed Internet through its iLines division. For more information, visit our website, www.lebanon-utilities.com or call us at (765) 482-5100.