Central Arkansas Water customers will see an 8.9 percent rate increase on average for residential accounts in the new year, allowing the utility's budgeted 2017 revenue to increase to $64.5 million.
That's a little more than a 6 percent increase over this year's revenue. Still, the utility kept operating expenses in the 2017 budget at $55.9 million, only a 0.32 percent increase over 2016.
Officials approved residential rate increases for 2017 and 2018 last year. There will be wholesale-rate increases for those years and for 2019.
While all Central Arkansas Water employees will receive a 2.5 percent salary increase in 2017 and health insurance premium costs will rise by 4.5 percent, the utility kept planned operating expenses down by decreasing other areas of the budget.
Decreases were made in the budgeted amounts for chemicals, utilities, contract services and the transition costs of adding Maumelle to Central Arkansas Water's system.
Capital expenses are expected to total $24.9 million next year.
The water utility plans to start building a 30-inch transmission main to connect to the Maumelle system in 2017. The total cost of the project is estimated at $10.3 million, but only $4.3 million is expected to be spent next year.
A little more than $1 million is expected to be spent in 2017 toward the $3.3 million project to improve the Wilson Plant Pump Station #1A.
Other capital improvements include rehabilitation of the Ozark Point Plant and replacement of aging galvanized, asbestos-cement and cast-iron water pipes throughout the utility's coverage area.
Rates will pay for about $10.3 million of those capital expenses, with the rest covered by bonds.
About 59 percent of the utility's expenses are expected to come from operating costs.
In addition to the pay raises and the health care cost increase, other increases in operating costs area include the addition of seven positions -- the majority of which will cover adding Maumelle to the utility. Accountants, technicians, meter readers, plant operators, a manager, technicians and maintenance workers will serve Maumelle.
Jeff Mascagni, the utility's chief financial officer, told the utility's Board of Commissioners on Thursday that budgeting water consumption is one of the main challenges the utility faces.
Water consumption has steadily decreased as more conservational usage features become available to consumers. Less water use means less funding for the utility.
Mascagni's department included a 1.6 percent decrease in budgeted water consumption for 2017, but he noted that some believe the drop in usage could be larger.
"We will have to keep watching that each year when we look at how we budget," Chairman Tony Kendall said.
Commissioner Roby Robertson has repeatedly said the utility needs to be conservative when budgeting consumption.
"I argue that if evidence shows at the end of this next year, we ought to come back and adjust the model again. I appreciate this cautious model now, but I think we might need to be even more cautious than that," Robertson said Thursday.
Metro on 11/11/2016