The city of Ridgeland has hired a company to conduct a water and sewer rate study.
Ridgeland Mayor Gene McGee and the board of aldermen voted during the Oct. 7 monthly meeting to hire Waggoner Engineering at a cost of $47,000 to conduct the study.
“Setting our rates accurately to cover our maintenance and capital costs is key to the long-term stability and health of the utility,” Alan Hart, public works director, wrote in a memo dated Oct. 2 to the mayor and board of aldermen.
“Overall inflation (CPI) rates in 2022, 2023, and 2024 were respectively 8.0%, 4.1% and 2.9%, significantly outpacing the baseline rate increase of 2% the City has enacted…The intent is to ensure that the City of Ridgeland is on the path toward a fiscally sustainable and healthy enterprise fund.
An enterprise fund for a water utility is a separate accounting and financial reporting mechanism that treats the utility as a self-sustaining business, funded primarily by user fees, not taxes. It segregates the water utility’s revenues and expenses from the rest of the government’s activities, with the goal of covering the costs of operation, maintenance, and capital improvements such as replacing pipes through user charges alone.
The study will provide the city of Ridgeland with a “transparent, defensible financial plan to guide long-term utility management and ensure reliable affordable services for the community,” according to information Waggoner Engineering provided.
“With continued residential and commercial development, increasing operational costs, and the need to reinvest in aging infrastructure, the city must ensure that its utility rates remain both financially sustainable and equitable for customers. Current water and sewer rates have only been incrementally increased in recent years, and a comprehensive review is now necessary,” according to the information.
The study will review existing revenues, rate structures and customer classes, evaluate operational costs, capital expenditures and depreciation; allocate costs using industry-standard methodologies, develop and test rate model scenarios to assess revenue impacts and conclude with a final report presenting recommended rate adjustments supported by clear analysis and defensible assumptions.
As part of the study, a five-year financial plan for the water and sewer utilities will be developed. The annual revenue requirements for both systems will be determined, the operating and operating and maintenance capital, debt service and reserve needs will be forecast, the funding strategies for a capital improvement program will be evaluated and rate adjustments needed to maintain financial stability will be identified.
The study will also include a cost-of-service analysis and rate design and alternatives, with at least three rate design scenarios being developed.
Waggoner will prepare a draft report and presentation for review and feedback and deliver a final report that will document the assumptions, methodologies, findings and recommendations and present the findings and recommendations during a board meeting. Waggoner will prepare a one-page document to explain the findings to the public.
Water utility companies and their operations have been a topic of interest to metro area residents in recent months.
Jackson Mayor John Horhn traveled to Washington to meet with the state’s congressional delegation about money shortages that JXN Water, the administrator of the city’s water and sewer systems, is experiencing. He asked Congress to reallocate $54 million in state revolving funds so they could be used for operations and maintenance.
Residents of Lake Caroline in Madison County served by Canton Municipal Utilities (CMU) have voiced their concern about an increase in water and sewer rates.
The rate increase is the first one CMU has had since 2012.
Maintenance has been deferred on the water and sewer systems, and CMU doesn’t have the money to make improvements because rates have been so low, said Keith W. Turner, one of two attorneys at Watkins & Eager who represents CMU on the rate increases,
The increase in rates will allow CMU to raise capital so it can make improvements in coming years, he said. “What we’ve had to do is deal with emergency and critical things first,” he said.
An auditor presented the annual audit of CMU at the Sept. 9 CMU meeting, Turner said, and stated that CMU has lost $12 million over the last seven years.
The House Select Committee on Capital and Metro Revitalization has scheduled the Metro Utility Hearing on Oct. 23 from 10 a.m. until 1 p.m. at the Capitol.
Rep. Clay Mansell, who represents District 56 (Hinds and Madison counties) and is co-chair of the Committee on Capital and Metro Revitalization, said he plans to invite CMU to discuss rate increases. The meeting will also tackle some city of Jackson water issues and delve into water usage at the Amazon data centers being built outside of Canton and in Ridgeland.
“I want to give the residents a chance to hear from the decision makers,” he said. “We’ll record the meeting. It’s going to be an informative session. We’re not out to get anyone.”
