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Glen Dale Mayor Janet Scott issued a statement Tuesday detailing the city's need to increase sewer and water systems rates to "meet the cost of operations" for city services.
Following a review of the financial performance of the sewer and water systems, Mike Abraham, the City of Glen Dale's Certified Public Accountant, determined that the water system needed a 60% across-the-board rate increase and the sewer system needed a 110% increase. Ordinances were passed for both rate increases during a city council meeting on Nov. 12, 2024.
For the new water rates, the average bill for a residential customer using 3,400 gallons monthly is projected to increase from $34.14 to $54.63. For the new sewer rates, the average bill for a residential customer using 3,400 gallons monthly is projected to increase from $29.75 to $62.47.
"Both systems need to generate sufficient revenue to meet the cash working capital reserve funding obligation of West Virginia Code Section 24-2-1(k), which is set at one-eighth of
operating expenses, generate positive cash flow and meet the financial performance requirements of existing bonds which the City has issued for its water and sewer systems,” Abraham said in a statement issued on Tuesday. “None of those requirements are currently being met. The City’s bonds require the City to take corrective action when utility rates are insufficient to meet the requirements of state law and the terms of the bonds."
Scott noted that Glen Dale's water and sewer systems are "both required to be financially independent enterprises from each other and the City’s general operations."
“With the circumstances of the last several years, both the sewer system and the water system have had to borrow from the City’s general fund in order to meet the cost of operations," Scott said. "Rates need to be increased so that each system is self-supporting, and can also repay the City’s general fund."
The West Virginia Public Service Commission regulates the Glen Dale water and sewer departments. Under state law, a city or town may not loan monies to its utility systems "no matter what the source," including subsidizing the operation of its utilities with federal revenue sharing funds or any other funds to "forego the necessity of increasing user charges those levels prescribed by law." Based on state law, the City of Glen Dale cannot use money from its general fund to fund its water and sewer plants.
Abraham noted that failure to have sufficient rates for water and sewer also violates "their respective bond rate ordinances." He determined that Glen Dale did not have "sufficient rates" to comply with the Bond Rate Covenant Ordinances for the Water and Sanitary departments.
“The water (and sewer) rates and charges shall be sufficient to provide each year gross revenues to make required payments into funds and accounts created by the bond ordinance," Glen Dale's Bond Rate Covenant Ordinance states. "Gross revenues shall be equal to but not less than 115% of the average annual debt service requirements, principle and interest and sufficient to pay all reasonable expenses of the system."
Abraham added that both the water and sewer departments were not compliant in maintaining a working capital reserve under West Virginia Senate Bill 234, which requires the city to seek rate increases to comply with this legislation.
"In order to comply with the above requirements, the new water rates represent a 60% rate increase," Abraham said.