Detroit suburbs facing 11.3 percent water rate hike

Detroiters will face a 16.7% increase in sewer rates while suburbanites will pay 11.3% more for water, on average, under proposed rates released today by the Detroit Water and Sewerage Department.

The rate increases are the largest in years and come as the department prepares to transition to a regional authority later this year.

The proposed rates still need approval from the Board of Water Commissioners before they would take effect July 1. Historically, the board has adopted the proposal as presented.

The increases are driven in part by falling water sales, which cut revenue more than $25 million last year. Officials said that they now plan to base bills on the previous 24 months of actual sales rather than on estimates provided by the communities, which have missed the mark in recent years.

"This is a reality true-up," said department director Sue McCormick. "We believe it is a one-time thing because once we do this, it will give us the ability to track the actual usage."

Another billing change shifts more of the bill to fixed fees for service and less from volatile sales volumes. Last year, 40% of bills were a fixed fee for service. That number will rise to 60% under the new proposed rates.

The two billing changes are designed to stabilize revenue.

"We have to have dependable revenue," McCormick said.

Another factor driving up suburban water rates is the city of Highland Park's delinquency. The city is under an emergency manager and the Detroit water department doesn't expect to collect any of the $5.5 million it will bill Highland Park in the coming year.

Other suburban communities must make up that cost, consultant Bart Foster said.

Detroiters can expect to pay 3.4% more for water under the proposed new rates but their biggest increase will come on the sewer portion of their bill, where the new rates rise 16.7% under the proposal. Suburban rates are poposed to rise just 1.1%.

Detroit rates have historically risen faster rate than suburban levels because of uncollected bills. The department expects to collect about 85% of the money billed in the city this coming year, Foster said.

The Free Press reported last month that larger than average rate increases were expected this year, despite a pledge by the department to hold revenue increases to 4% or less.

McCormick noted that the department has kept overall costs the same from last year to this year, but rates are rising to make up for lower sales volumes.

"This honors the 4% commitment that my administration and our board made," McCormick said.

McCormick also touted cost-cutting efforts the department has made in recent years, including cutting more than 850 workers and refinancing bonds to save an estimated $250 million in coming decades.

For suburban customers, the changes are to the wholesale rate they pay to Detroit for water.

Suburban communities typically mark-up those rates for homeowners and business to cover the costs of their local distribution systems.

Communities across Metro Detroit began receiving their rates in the mail this week.

Contact John Wisely: 313-222-6825 or jwisely@freepress.com.