How Much Does It Cost The City To Provide Water?

One of the factors Mayor Bill Norris said he took into consideration when he vetoed the amendment to the amendment of the Water Resources Management Ordinance was a water rate study done by the Mississippi Rural Water Association.

Aldermen questioned the rate study figures when first considering the amendment last December and again Feb. 3 when overriding the mayor’s veto.

So, who is the Mississippi Rural Water Association (MsRWA) and what authority do they have?

The MsRWA is the state’s largest water and wastewater utility membership organization with offices located near Jackson in Raymond.

According to Executive Director Kirby Mayfield, the association provides training for water system operators, managers, bookkeepers and decision-makers throughout the state. Their technicians are certified and the MsRWA is a recognized authority for water rate studies in Mississippi.

Mayfield explained that there are a number of factors taken into consideration when formulating a rate study including expenses such as electric power and chemicals. “We use the number of customers they’ve got and how many millions of gallons they billed over the last 12 month period,” he said.

“We know what we’re talking about,” Mayfield emphasized. We go out there and do it every day.  Bottom line, you’ve got to look at what you take in and what you pay out. And, you’ve got to make a profit to survive.”

Tom Abernathy, north circuit rider for the MsRWA, did the study for Water Valley. His figures show that based on operating expenses it cost the city $.59 per thousand gallons just to bring the water to ground level. The cost rises to $1.36 per thousand gallons to deliver water to the customer.

When future expenses are added, including depreciation of wells and tanks, the figure is $1.62 per thousand gallons. “An elevated paint job on a tank is going to cost you anywhere from $50,000 to $70,000 and that paint job is going to last you ten to twelve years,” Mayfield said.

“If you’re not making a little profit every year, when that ten to twelve year period gets here, you’re going to have to go borrow money. When you increase your loan obligations, you increase your rates then.”

Mayfield noted that the figures for Water Valley are about average for water systems in the state.

 

You Do The Math

Now that the industrial water rate is being returned to the old descending rate structure, what does that mean in practical terms?  It can be demonstrated by calculating the price of 10 million gallons of water, an amount within the range used in a month by an industrial customer.

The price charged by the city for the water would be $3961.70, under the descending rate system. According to the rate study, the water cost the city $5156.72 to produce using the figure of $.59 per thousand gallons.

That $.59 figure is based on the expense to pump the water to the surface and does not include costs associated with delivery to the customer, according to the study done by Tom Abernathy of the Mississippi Rural Water Association.

The end result is a loss to the city of $1938.30. Eventually the rate paying public pays the difference, according to Mayor Bill Norris.

The Herald contacted officials in Scott County where eight of the state’s 23 poultry processing plants are located. The city of Forest charges $.77 per thousand gallons of water and the city of Morton, $.70 per thousand.

Forest officials added that because of the expense of processing wastewater, they charge a flat sewer rate of $1.70 per thousand gallons. That would add up to $17,000 for 10 million gallons.

In Water Valley, the sewage cost is about 75 percent of the monthly water charge.

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