AE2S Nexus is preparing to distribute the 2014 version of its annual North Central Utility Rate Survey. We would like to thank the 224 participants this year. We received responses from 108 systems serving populations of 5,000 and greater, 81 systems serving populations less than 5,000, and 35 regional systems. As in previous years, survey data was solicited from utilities in Minnesota, Montana, North Dakota, South Dakota, and Wyoming. In addition, this year we were pleased to receive a few responses from communities in Wisconsin. In appreciation for volunteering survey information, each participant will receive hard copies of the complete report.
Two survey reports are being prepared for distribution: one for systems serving 5,000 people or more, including systems in the Minneapolis/St. Paul metro area; and a second survey for systems that serve fewer than 5,000 people, as well as regional water systems. The results of the survey are reported based on an average monthly residential water use value of 6,000 gallons. Based on input received from respondents in 2013, this year we also asked systems to report commercial water and wastewater charges, for additional perspective. The survey booklets will contain graphics illustrating the cost of 6,000 gallons of water or wastewater for commercial users.
Reported 2014 Rate Increases
Of the survey respondents serving greater than 5,000 people, 32 are from the Minneapolis/St. Paul metro area which receives wastewater services from the Metropolitan Council – Environmental Services. Results from the metro area respondents indicate that 81 percent of responding systems implemented an increase to water rates in 2014. For the same group, 63 percent of wastewater systems and 67 percent of stormwater systems increased rates in 2014. For the 76 respondents from non-metro systems serving populations greater than 5,000, 47 percent reported water rate increases in 2014, while 57 percent of wastewater systems and 32 percent of stormwater systems increased rates. The average percent increase for each utility by population is shown in Figure 1 for metro and non-metro systems serving 5,000 or more people.
Overall in 2014, the average increases for water, wastewater, and stormwater for systems serving 5,000 people or more were 8.3 percent, 9.4 percent, and 13.8 percent, respectively. For comparison, in 2013 the average rate increases for systems of this size were 7.5 percent for water, 6.5 percent for wastewater, and 5.8 percent for stormwater.
For systems serving less than 5,000 people, 28 percent of respondents reported an increase to water rates, 38 percent increased wastewater rates, and 12 percent increased stormwater rates in 2014. Figure 2 illustrates the average water and wastewater rate increases by population for the small systems. It should be noted that only 21 percent of respondents in the survey of smaller communities reported having a stormwater utility, and of those, only two reported a 2014 increase. Due to the small sample size, the average increase by population is not reported for stormwater in Figure 2.
For the systems serving fewer than 5,000 people, the average reported increases for water and wastewater in 2014 are 11.7 percent and 18.8 percent, respectively. This compares to average increases for water and wastewater of 16.5 percent and 17.8 percent last year.
Figure 3 illustrates the 2014 average monthly water and wastewater charges by population grouping, based on an average monthly water use of 6,000 gallons.
A summary of the historical results reported by regional rate survey participants since 2008 is provided in Figure 4, which shows the average median reported charges for 6,000 gallons of water each year. The number of respondents to the survey each year is also indicated. It should be noted that recent years have seen much lower participation from regional systems, which may be why the average and median charges do not appear to have increased significantly since 2008.
Conclusion:
From a historical perspective, the average water and wastewater charge for 6,000 gallons in our region from 2002 to 2014 has climbed at a rate higher than inflation, based on the Consumer Price Index for All Urban Consumers (CPI-U). Figures 5 and 6 illustrate the change in average charges for 6,000 gallons of water and wastewater service since 2002 for systems serving greater than 5,000 people (including the Minneapolis/St. Paul metro area) and systems serving less than 5,000 people. The results illustrate the challenge that utility managers and policy makers continue to face in meeting financial demands on system operations while striving to minimize user charge increases.
AE2S Nexus hopes that the results of the survey will be useful to your community or regional system as you evaluate your utility rate charges and plan for the future. If you participated in the 2014 Rate Survey, watch for your copy to be delivered by mail or by an AE2S or AE2S Nexus representative soon. If you have questions related to the 2014 North Central Region Utility Rate Survey, please contact Miranda Kleven at 701-746-8087 or Miranda.Kleven@ae2s.com.