Possible utility rate increase may be ahead for Somerset customers

May 24—At Tuesday's budget workshop for the City of Somerset, the same refrain could be heard throughout all utility talk: Inflation, possible rate increases, and Cost of Living Adjustments (COLAs).

Water, wastewater, natural gas, and sanitation were among the departments discussing their proposed budgets in front of City Council members. The council will vote by the end of June to firm up next year's budget before the beginning of the new fiscal year on July 1.

For two departments, wastewater and sanitation, some of the budget crunch talk revolved around what has been one of the hottest topics of conversation over the past couple of months: Leachate.

Because the city has pulled the trigger on ending the processing of leachate at the Pitman Creek Wastewater facility, the city will no longer be receiving the revenue for that.

Somerset Chief Financial Officer Mike Broyles broached the subject in the first few moments of discussing the wastewater department. "I'll say this once then I'm moving on: The leachate is showing a zero revenue."

Mayor Alan Keck then noted that the contract to accept leachate still has around 60 days on its 90-day severance clause, which means revenue might "trickle into" the next fiscal year, but it was not budgeted in.

"It's zeroed for a reason and I think everybody knows why: Because you voted to get rid of it," Keck told the council. "So we don't need to budget for it. I don't want any games being played. If it were budgeted, you might think I'm trying to pull something."

The loss of that revenue led Councilor Robin Daughetee to ask, "Since we lost $600,000 right off the bat, how's that going to affect any maintenance or any projects?"

Broyles responded, "It's going to have to be picked up with revenue or being very frugal. I think all of you (council members) that have been here a while know that ever since I've been here I've fussed about needing to raise the sewer rate. We still need rate increases to cover costs. ... I know nobody wants to do it and [you] don't like to hear it, but I wouldn't be doing my job if I didn't tell you that it is necessary."

Keck added: "The increased costs, probably, to get rid of our sludge is going to be a factor. We'll have to figure out where to put that (number). I don't know if it comes out of sewer or comes out of sanitation. ... It's another cost we're going to have to kick around."

One of the biggest reasons anti-leachate residents have been vocal about stopping the processing of it is due to the possible presence of PFOAs and other "forever chemicals" that have been linked to cancer and other health ailments. Their argument is that by processing leachate, a liquid runoff that comes from landfills, introducing the processed water into Lake Cumberland could be adding forever chemicals.

And while it might still be several years out, Keck noted that there are technologies on the horizon that could be added to wastewater treatment plants that are designed to remove forever chemicals. Since "there's been so much passion and focus on it, I think Somerset should look to lead the way. Leachate aside, it's in there anyway," Keck said, noting that those chemicals, which are present on clothing and cooking accessories, are constantly being washed and flushed into the sewer system from residential sources.

While utility rate increases were not proposed during Tuesday's discussion, Keck said that such a discussion would come at a later date.

What was discussed was the fee new consumers pay to tap onto the water system. Councilor Jim Mitchell brought up that he'd heard the water department was losing money on tap-ons, which Keck confirmed.

The current tap-on fee is around $600 to $700, Keck said, while the cost to the department is around $800 to $1,000.

"I'll bring the new costs before you all when we vote on the budget. We'll have the tap fees as part of an addendum for you all to consider," Keck said.

In other water department news, Broyles said that Somerset had been given $790,094 from the Cleaner Water Grant that is to be used for improvements on the water treatment plant at Waitsboro.

Keck said the project is to replace membranes at the plant which need to be replaced every 10 years.

Water and Wastewater Department Supervisor Dana Whitis updated the council on the ongoing installation of new water meters, which can be read via a radio signal and speeds up the process needed to read meters.

Whitis said that out of 10,000 water customers, around 2,500 have received the new meters.

"It's a slow process, but we're making progress," Whitis said, with Broyles saying part of the hold up is supply chain issues making it take longer to receive meters.

"It will probably be another year and a half before we finish," Keck added.

Talk of possible rate increases came back in, of all places, the natural gas department — a utility that has traditionally been a money maker for the city.

Keck said that the world has changed over the past few years, partly due to one of the processes for finding gas, known as "fracking," becoming less popular with the public. He also pointed to the "war in eastern Europe" as causing price fluctuation.

Gas Department Director Bruce Neely told the council that gas prices for the city have nearly tripled over the past few years, while Keck said that because they have not charged residents any more for it, "we had some cold weather where we were losing money."

Keck said that one of three things needed to be looked at: tying residential bills to an index of some kind, having a rate increase, or having a combination of a rate increase and a COLA increase.

"I think we need a COLA, and I think we need some kind of trigger that if gas goes above 'X,' we have a mechanism to protect ourselves," Keck said.

The excess revenue collected from the natural gas department usually helps out the general fund, Broyles said, but if the revenue isn't clearing costs, then it can't help.

"If something isn't done to protect us, at some point in time, you're going to have to decide what you're cutting out of the general fund or what you're cutting out of the gas department," Broyles said.

As far as the sanitation department, the predicted increase in costs will be a combination of inflation and the city's decision not to accept leachate from the landfill the city's garbage goes to, Keck said.

"It's not a scare tactic," Keck said. "I fully expect the landfills to raise our rates by not taking their leachate. It's going to happen."

When Keck asked Sanitation Managers Jason White when the last time residential rates were increased, White said that he had seen them go up "a quarter" in the 10 years he has been there.

Keck also noted that county residential customers just got hit with a rate increase that was almost double what the previous bill had been.

"We don't need to do that," Keck said. "I don't think that's fair."

But, he said, wage costs and the cost of diesel increasing has added to the expenses of the department.

"Inflation's just real," Keck said.

He said he will be proposing an increase of "a couple bucks a month" as well as a COLA to the council.

"I will be presenting it because we have to," Keck said.

Carla Slavey can be reached at cslavey@somerset-kentucky.com