DU water rates increase without council vote

Jan. 25—Customers of Decatur Utilities will see an increase in their bills for water used in January, an increase that was not put on the City Council agenda and that therefore received no vote or discussion despite the council's ability to block or delay the increase.

On Nov. 16, the Municipal Utilities Board approved an increase tied to the Consumer Price Index of $1.25 per month in the access fee for typical residential water customers with a 5/8-inch meter, taking it from the current monthly rate of $13 to $14.25.

Residential customers with a 1-inch meter will see an increase in access fees from $13 to $15. Commercial and industrial customers with larger meters would have rate increases ranging from $5 to $900 per month. Commercial volumetric rates would also increase by 10 cents per thousand gallons.

Access fees are flat fees that do not vary based upon how much water customers use. Utility bills also have a component that bases charges on the amount of water used.

City code section 23-41 says DU should consider inflation adjustments 60 days after the start of the fiscal year. If the Utilities Board adopts a resolution by Nov. 30, the proposed increase then goes to the City Council, which has 30 days to "direct otherwise" or the proposal goes into effect in January, according to an ordinance passed in 2015.

City Attorney Herman Marks said Monday that "CPI increases are automatic unless the council acts to reject a proposed increase."

DU General Manager Ray Hardin forwarded the proposed rate increase in a letter that was addressed to the mayor and City Council on Nov. 16, so the rate increase was automatically approved without council action 30 days later before taking effect Jan. 1.

Council President Jacob Ladner said he didn't present the rate increase to the council "because a CPI rate increase is always automatic. I'm not aware of one time in which the council didn't approve a CPI rate increase."

Ladner sad CPI increases due to inflation "happen to everything we do in life," and he would be concerned that not allowing the utility to adjust its rates could impact it financially.

Councilman Hunter Pepper disagrees with Ladner on how the proposed rate increases should have been handled.

"I find it very troubling that the council president would not put an item like a water rate increase on the council agenda," Pepper said.

Pepper said the council should at least have had a public discussion.

"I may vote for it and it may pass, but the public should know how each councilman votes (on a rate increase)," Pepper said.

Ladner said he talked to Pepper on Monday and the District 4 councilman said he didn't receive the same email from DU General Manager Ray Hardin that informed the council of the proposed CPI rate increases to its water system and also advised that the rates would go into effect automatically absent a council vote.

"I don't think he understands the process," Ladner said of Pepper. "I've always said I'm willing to put anything the other council members want on the agenda even if I'm against it. All of the council members received Ray's letter, and at no time did I receive a request to put the rate increases on the agenda."

Councilman Billy Jackson said he "isn't comfortable" with allowing rates to go up without council approval.

"Rate increases need a City Council vote at all times," Jackson said. "It's our responsibility to look at these things. It's not something that we should be able to dodge. This gives City Council members the opportunity to dodge their responsibilities and even the criticism that goes with the rate hikes."

Jackson said he understands inflation is a problem everyone is dealing with, but utility rate increases are particularly hard for low- and fixed-income residents. He pointed out that Decatur Utilities, with council approval, also increased sewer rates by a combined $22 a month in 2021 and 2022.

CPI rate increases do not always receive automatic council approval. In 2015, the council at the time delayed CPI rate increases for water, electricity and gas for two years while approving access fees that were phased in during the same period of time.

Councilmen Kyle Pike and Carlton McMasters said they're aware of the rate increase and they're OK with the council not voting on it.

"I would have voted for the rate increase, so I'm OK with not putting them on the council agenda," Pike said.

McMasters said the council's history of approving CPI-based rate increases supports Ladner's decision not to place it on the agenda. He also pointed out that "even with the increases, Decatur Utilities still has the lowest combined utility rates in all of Alabama."

DU spokesman Joe Holmes on Tuesday said the utility "still had the lowest combined bill among other municipalities in Alabama as of April 2022 but the survey has not been updated since then."

Lisa Terry, who became business manager and chief financial officer on Jan. 1, reported in November that DU's water system had a net income of just over $1 million in fiscal 2022, which is $106,000 more than had been budgeted.

At the time, Hardin said that, while net income was "a little better" than budgeted, increases in operation and maintenance expenses suggest a downward income trend that made him uncomfortable.

Hardin added the rate increases are needed for DU to maintain financial targets required by its lenders and bond rating agencies.

bayne.hughes@decaturdaily.com or 256-340-2432. Twitter @DD_BayneHughes.