Water Service Rates
Water Rates, Fees and Charges are set to increase October 1, 2023
WHERE DO MY RATES, FEES, AND CHARGES GO? (Water Fund Information)
You are receiving this letter because your water utility service is provided by the Village of Tequesta’s Utilities Department. The rates, fees, and charges collected for services provided by the water utility are placed into the “Water Fund,” an enterprise fund created by the Finance Department to account for water utility operations. The water utility provides water for firefighting and drinking water within the water utility service area, and it’s financed and operated similarly to private business enterprises. The costs of providing water utility services to our customers are financed or are entirely recovered through user charges, not property (ad valorem) taxes. All activities necessary to provide services are accounted for in this fund, including capital improvements, capitalized repair and replacements, administration, operations, regular maintenance, billing, and collection.
WHY DID MY RATES GO UP AND WHAT IS A CAPITAL RECOVERY CHARGE (CRC)?
Like many utilities nationwide, the water system has significant aging infrastructure and the Utilities Department (UD) has planned capital improvement projects (CIP) that are vital to sound water system operations. Several significant issues face the water system. The water treatment plants have components at or near their useful life expectancy and need safety, redundancy, rehabilitation, or efficiency upgrades. Aging pipes are another concern and many pipes are at or near their life expectancy. Aging infrastructure issues must be addressed before the risk of failure increases. Current operating and capital costs have risen significantly over the past two years due to worldwide economic conditions. These conditions caused operating elements such as chemicals, meters, hydrants, and other resources to climb considerably and for existing capital projects to escalate drastically, by up to 60%. The water utility financial model was updated to reflect these cost increases, extended to 20 years, tied to the 20 year capital needs, and presented at the February regular Council meeting. At the July regular meeting, the Village Council approved and adopted a rate increase and a capital recovery charge (CRC) based on the financial model and CIP plan. The CRC will be charged based on an equivalent residential unit, will be used to fund only capital projects on the CIP list, and will only be in place as long as the currently planned programs are ongoing. It would sunset after that point. The charge will be $10 per month on an average resident’s water utility bill over a 20-year period, consistent with the financial plan presented to the Village Council. The CIP plan is reviewed and analyzed annually and projects may be reprioritized as required to maintain system integrity.
SUMMARY – RATES, FEES, AND CHARGES EFFECTIVE OCTOBER 1, 2023
Many dynamic factors help determine a water utility financial and rate plan, so the financial forecast and capital funding plan will be reviewed every two to four years or as needed if some of the factors change significantly or a potential impact is recognized, especially in this current economy. Capital projects are reviewed annually for reprioritization or as needed. The water utility must maintain its financial health. We’re in the business of public health and safety, providing fire protection through fire hydrants to our citizens and drinking water to our customers within our 4-square-mile water utility service area. Village leadership and elected officials recognize these facts and have supported the needed rate adjustments. Any approved rate increase does not mean the Village Council will stop searching for ways to lower rates if possible. The Village will continue to hunt for federal and state grants, county assistance, operational efficiencies, improved financial practices, and anything else to allow the Village to maintain rates in the future and reduce or eliminate the capital recovery charge if possible.
For additional information, please contact the Village of Tequesta Utilities Department at (561) 768-0700, or visit our website.