DOBSON — Some county water customers will likely see an increase in their rates.
County Manager Chris Knopf relayed a plan to increase water rates throughout the course of the next five years in the Flat Rock-Bannertown and Elkin-Gentry Road Water and Sewer Districts to commissioners at Monday’s meeting of the Surry County Board of Commissioners.
At the board’s planning retreat in early March, commissioners saw the results of a study performed by a representative from the N.C. Rural Water Association. The representative indicated aggressive rate increases were necessary to bring the districts, which function as separate legal entities, “into the black.”
Commissioners directed the representative and Knopf to present a plan which used smaller increases over the course of a longer period of time to bring the districts to a point in which they were making money rather than losing money.
Monday Knopf presented a plan for a 7-percent increase each year for the next five years.
“Each of these (districts) is subsidized out of the general fund,” explained Knopf. “That’s something we try to avoid at all costs.”
In the current budget year, commissioners appropriated about $69,000 from the general fund to support the operations of the Flat Rock-Bannertown District and $11,100 for the Elkin-Gentry Road District.
Each time a subsidy is made from the general fund, the county receives a letter from the Local Government Commission pointing out the budgetary impropriety.
“These rates haven’t been updated in years. It’s long overdue,” said board Vice Chairman Eddie Harris. “They’ve been operating at a bargain-basement price with a subsidy from county taxpayers.”
In short, Harris explained while customers in the districts reap the benefits of water service, other county residents are helping to foot the bill for the services customers enjoy.
If the plan is adopted, base rates in the Flat Rock District for residential users would rise from $20.30 to $21.72 in the first year. The rate per 1,000 gallons of water used would rise from $4.46 to $4.77. After five years, base rates will have climbed to $28.47 for residential users, and the usage fee would be $6.26 per 1,000 gallons used.
In the Elkin District, residential base rates would rise from $22 to $23.54 in the first year. The rate per 1,000 gallons used would rise from $4.95 to $5.30. At the end of the five-year plan, residential customers would see a base rate of $30.86 and a rate of $6.94 per 1,000 gallons.
Commercial water customers will also endure a 7-percent rate hike each year throughout the duration of the plan.
“Eventually, these will cover or come close to covering the operating expenses,” noted Knopf. “It won’t compensate for depreciation, however.”
Knopf explained the county should be “packing money away” within each of the enterprise funds to be used for infrastructure updates and repairs within each district.
Knopf also echoed his remarks from the past, saying it was the county’s intent to hand over both districts to Mount Airy and Elkin, respectively. However, he said that’s not realistic until the rates are more in-line with the rate structures of the two municipalities.
For instance, if the Elkin District was handed over to the town of Elkin right now, residential customers would have to shoulder an increase in their base rate of more than 52 percent.
Additionally, Knopf said the Flat Rock District cannot be turned over to Mount Airy until all debt is paid related to the district.
“That’s in about 30 years,” noted Knopf before saying commissioners might be able to pay it off early in about five years.
Though commissioners did not yet approve any increases, they instructed Knopf to include the first year’s increase in his recommended budget for the next fiscal year.
Knopf will present his proposed budget in June.
Andy is a staff writer and may be reached at 415-4698.