Sewer rates will rise in 2012

Town of Orange sewer customers will see an increase in their wastewater bills beginning in January.
Last month, the Orange Town Council held a public hearing regarding a suggestion by the council-appointed rates committee to increase the town's wastewater rates. Over the past several months, the committee has been reviewing the town's water and sewer rates to offset costs associated with the new wastewater treatment plant and to more closely align rates with the cost of production. The group discovered that the cost of wastewater processing is approximately 50 percent higher than the current charges for the consumption rate. To offset the difference, the committee suggested a 15-cent increase in the sewer consumption rate, implemented in three five-cent increments with the first beginning Jan. 1, 2012, the second July 1, 2012 and the third July 1, 2013. The committee did not suggest any changes to the sewer base rate or to any of the water rates.
Currently, in-town sewer rates are $0.40 per 100 gallons. It would increase to $0.45 per 100 gallons Jan. 1, $0.50 July 1 and $0.55 July 1, 2013. The out-of-town rate is currently $0.66 per 100 gallons and would increase to $0.71 Jan. 1, $0.76 July 1 and $0.81 July 1, 2013.
Increasing the rate is not a new topic for the town council. In order to pay for the town's new $24 million wastewater treatment plant, the town applied for a grant to cover the cost of nutrient removal, which resulted in $8 million toward the cost of construction. The town took out a .05 percent 20-year loan from Virginia Resource Authority to pay for the remaining $16 million. Payments came due this year, with an interest-only payment of $75,000 in June and the large annual payments of $871,000 will come due beginning in June 2012.
Originally, the loan was expected to be paid using two sources, the wastewater availability fee and the rate fee. The availability fee, $16,400 per unit, is what someone pays when they are first connecting to sewer. Had projected residential growth occurred as expected, this fee alone should have paid the loan back. However, without the growth, the rate fee has to make up the difference.
According to town manager Greg Woods, when the loan was originally secured, the town promised to increase the sewer base and consumption rates by 7 percent each year. Only the base rate was increased, and only for three years. The consumption rate went unchanged.
Last year, council members agreed to increase the sewer base rate by 38 percent, which Woods said helped bring the rate closer to where it would have had the increases taken place as originally promised. Also, the increased helped with putting the town in a prime position to qualify for an extreme hardship loan, which would allow the loan to be refinanced for 25 years at 0 percent. Increasing the consumption rate brings that possibility even closer.
No one spoke during the town council's public hearing on the new increase. However, council was not unanimous in its decision to increase the rates.
"The real issue is [the increase's] effect on small business," council member Kent Higginbotham said. "Now we're in a jam on this, but I think we need to look at cutting expenses, not just raising rates."
Council member Harry Hopkins supported the increase.
"I go back to the proposition the Department of Environmental Quality made to us on building the plant," he said. "[We gave] our word if built, we would do something to help it out. We gave our word and we need to back that word up."
Council member Henry Lee Carter made a motion to accept the rate increases as proposed. It was seconded by Hopkins and passed 3-2. Higginbotham and council member Ryan Gibson dissented.
Town residents should see the first $0.05 increase in their January sewer bill.