Marshall County PSD No. 1 Approves Request for 30% Rate Increase
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The Marshall County Public Service District No. 1 approved the submission of a 30% water rate increase for customers to be submitted to the Public Service Commission following a public hearing on Thursday.
The PSC must approve the rate increase before customers see it reflected on their bills. PSD No. 1 General Manager Aaron Foster said that action from the PSC on the submitted rate increase would likely take "six to eight months."
PSD No. 1 serves 14,182 customers from Jordan Ridge to Bethlehem. The approved rate increase would bring the rate to customers to 39%, resulting in an average increase of about $10 for each customer, according to Foster.
PSD No. 1 board members unanimously approved the rate increase following a public hearing regarding the ordinance. Board members, Foster, PSD No. 1 accountant Brandon Perry and PSD No. 1 legal counsel Mark Panepinto fielded questions from the crowd of more than 30 residents.
Panepinto began the meeting by sharing the rationale behind the rate increase with meeting attendees. He said PSD No. 1 was in a "quite a deficit," losing money monthly for "quite some time," with the increase in an effort to cover this deficit.
"The Public Service District is, in fact, what the name implies," Panepinto said. "It's a public service, and they're not here to make money. They're essentially here to spread the cost of what it takes to produce water to all the people that live in the district, and essentially to do it for little to no margin."
Panepinto said the alternative to the rate increase would be bankruptcy for PSD No. 1. This would "most likely" result in shutting down the water treatment plant, with customers having to seek alternative methods of providing water to their homes.
Perry shared that during the past 10 months, since July 1, 2024, for PSD No. 1, cash was down by about $149,000. This equated to a net loss of $14,900 per month, with average sales collections for the past six months being $69,627.
The rate increase would offset the $14,900 monthly loss over the past six months, plus a loan payment for a new $125,000 pump-related loan. An additional $3,500 was added to this total to "bring working cash up to a reasonable amount."
The total amount needed for sustainability of $20,860 divided by the average six-month collections of $69,627 resulted in the proposed percentage increase rounded up to 30%.
Foster shared that PSD No. 1 was losing an average of 5 million gallons of water per month due to leaks in its water system, which represents about a 25% water loss. He noted that, although this "sounds bad," they were losing less than most systems in the state, which typically operate at anywhere from 40 to 60% water loss.
"You see the reflection of that water loss in their rates," Foster said. "We're ranked at number 55 for the lowest rate in the state, so that's 250 other PSDs that are paying more because they have 40% or 60% water loss."
Foster added that PSD No. 1 was working with Boswell Water Services to detect leaks in its system. In response to a question from an attendee about the cost of the company's services, Foster stated that the company charges approximately $1,500 per day to perform a leak survey.
"We base our leak trouble on whether we go over 330,000 gallons of water a day, and we've gotten as high as 600,000 gallons," Foster said. "When that happens, I make the phone call to Boswell and ask them to start looking for leaks again in an area we want to target."
Foster added that the rate increase would also help PSD No. 1 meet grant and loan eligibility requirements for state assistance, as PSDs must have rates at a certain percentage of the median household income in their area.
To reach the threshold for obtaining state assistance for water system repairs, Foster stated that PSDs typically need to charge $35 per month for their customers. He noted that the 30% rate increase would reach this threshold.