photo by: Shutterstock

City leaders will soon consider a proposal to raise the typical city utility bill to $145 per month over a period of three years.

As part of its meeting Tuesday, the Lawrence City Commission will provide city staff direction on a proposal to increase water and sewer rates by 8.75% in 2023, 10.5% in 2024, and 12% in 2025. If approved, the bill of a typical utility customer using 4,000 gallons of water a month would increase from $115 to $145.

The city’s three utility funds are enterprise funds, meaning the rates charged to residents are set to cover the personnel, maintenance and other costs of operating the utility service. City staff states in a memo to commissioners that the rate increases are needed to pay for additional personnel and infrastructure repairs, as well as to account for inflation. The recommended proposal is one of four scenarios for rate increases put forward for consideration.

The memo states there are many capital projects that are needed to meet regulatory obligations and address significant deferred infrastructure maintenance. Examples included projects to address aging infrastructure and sustain system reliability; relocation of utility infrastructure for multiple road projects; regulatory mandates, including major upgrades to the Kansas River Wastewater Plant for nutrient removal; and projects to expand capacity or account for growth, such as a new sewer conveyance corridor.

The recommended water and sewer rate proposal, called scenario 2, would fund seven positions included in the 2022 rate model to support mandated regulatory upgrades at sewer treatment plants and an additional 12 infrastructure projects not currently funded.

If approved, the proposed rate increase would continue rate increases of recent years. From 2015 to 2022, the typical utility bill has increased from about $77 per month to about $115 per month, according to past city budget documents. The recommended increase scenario would increase the typical bill to $122 in 2023, $132 in 2024 and $145 in 2025.

photo by: City of Lawrence

This City of Lawrence chart shows the annual financial impact on a utility customer using 4,000 gallons of water per month under the city’s recommended water/sewer rate increases.

The other three scenarios have varying levels of increases over the next three years, and the memo notes that all of the scenarios spend some cash reserves in 2023 to lower rate increases and “allow time to revisit expense and revenue assumptions next year.” The commission will only adopt the revenue increases tied to any rate increase for 2023 as part of its budget process this summer, but the city is presenting the rate proposal in a three-year increment to improve planning.

The city memo notes that some Lawrence customers have used federal pandemic relief and other social support programs to help pay down their past-due utility bills. The memo states that as federal and state assistance programs taper off, city staff is keeping open the option of using general fund dollars to assist customers who need help with their utility bills to “minimize the impact of rate increases.”

The city also created is own utility donation program, which asked Lawrence residents to donate money to help low-income residents pay their utility bills. That program has had minimal participation, with 43 customers signing up to donate. Since the program began one year ago, those customers have raised a total of $3,827 to support eight customers.

The four scenarios for water and sewer rates that city staff will present to commissioners on Tuesday are as follows:

Scenario 1: This scenario calls for an 8% rate increase in 2023, a 9.75% rate increase in 2024, and an 11.5% increase in 2025. The increases would fund the city manager’s recommended budget and Capital Improvement Plan (CIP) as well as seven positions included in the 2022 rate model to support mandated regulatory upgrades at sewer treatment plants. This is the baseline scenario for the price comparisons in the following scenarios.

Scenario 1S: This scenario calls for an 8.5% rate increase in 2023, a 10.25% rate increase in 2024, and a 12% rate increase in 2025. This scenario includes the expenses in scenario 1, and also increases funding for sustainability upgrades for three CIP projects, including the Field Operations Campus, Kansas River Wastewater Treatment Plant upgrades, and utility vehicle replacements. This scenario represents a $16.6 million increase in utility rate revenue over scenario 1.

Scenario 2 (the recommended scenario): Calls for an 8.75% rate increase in 2023, a 10.5% rate increase in 2024, and a 12% rate increase in 2025. This scenario includes the expenses in scenario 1, plus funding for 12 additional CIP projects that are currently unfunded. This scenario represents a $9.2 million increase in utility rate revenue over scenario 1 during the three-year rate period and a $40 million increase over the five-year duration of the CIP.

Scenario 2S: Calls for a 9.5% rate increase in 2023, an 11% rate increase in 2024, and a 12.5% rate increase in 2025. This scenario includes the expenses in scenario 1, the 12 CIP projects in scenario 2, as well as additional increases in funding for sustainability upgrades for five CIP projects. This scenario represents a $58.5 million increase over scenario 1.

Though the revenue increase associated with any agreed-upon water and sewer rate increases for 2023 will be reflected in the 2023 budget that the commission will approve later this summer, the water and sewer, solid waste and storm water rates will not be officially presented and adopted until the fall. As part of the meeting Tuesday, commissioners will provide direction to city staff in preparation for bringing those rate ordinances forward.

The Lawrence City Commission will convene at 5:45 p.m. Tuesday at City Hall, 6 E. Sixth St.