Melrose water and sewer rates could be going up for the second time in a month as the city faces a $158,771 sewer deficit, a sharp drop in water revenues, and starts saving money to cope with higher costs anticipated from the Massachusetts Water Resources Authority.
New rates proposed Monday to the Board of Aldermen would raise the residential water rate by 20 cents, to $5.65, a 3.5 percent increase over the rate approved on June 18. Commercial water rates would increase by 25 cents, to $7.20, or by 3.6 percent. Sewer rates for all ratepayers would increase by 42 cents, to $10.02, a 4.3 percent increase over the rate set last month.
Water and sewer charges are based on 100 cubic square feet of usage. On Monday, the aldermen’s appropriations committee, which includes all 11 members, will meet at 7:30 p.m. at City Hall to discuss the latest rate proposal.
“There will be at least three separate meetings at which this will be discussed,” said Alderman-at-Large Donald Conn, the committee chairman, who also is part of a group that developed the new rate and reserve proposal.
Aldermen on June 18 approved increases of 7.7 percent for residential water rates, 7.6 percent for commercial water rates, and 2.6 percent for sewer rates charged to all customers. At a public hearing last Monday, some residents said the back-to-back rate increases are a one-two punch to their pocketbook.
“Melrose citizens are getting an 11.43 percent increase in water rates, despite lower consumption,” said resident Arnold Koch. “The MWRA is definitely the elephant in the room.”
“The MWRA is expecting the cities and towns to absorb their increases,” said Estelle McDonough, a homeowner on Main Street. “I think the state needs to be friendlier to cities and towns, and what our needs are.”
The MWRA increased water/sewer charges to Melrose 2.6 percent, or a total of $7.8 million, to provide water and sewer services this fiscal year. The increase is less than the average 3 percent increased charged to its 61 member communities to cover its $636 million budget for this year.
Much of the agency’s budget goes toward debt still owed on the $4.5 billion cleanup of Boston Harbor, a $2 billion upgrade to its water system, and other capital improvements. “Because our costs are fixed, a bill doesn’t go down if a community uses less water; everyone’s share increases,” Ria Convery, an MWRA spokeswoman, wrote in an e-mail to Globe North. “Each community then adds its own costs to the retail bill it sends to individual households.”
In Melrose, a 10 to 20 percent drop in water consumption led to less water and sewer revenues last year. But the MWRA assessment went up. “When their rates go up, our rates have to go up,” Patrick Dello Russo, the city’s chief financial officer, told aldermen last Monday.
The total amount of water and sewer revenues collected was not known until all bills were due by June 30. But the aldermen had to set new water/sewer rates before that date. Dello Russo, and public works superintendent John Scenna, told the aldermen last month that a second rate hike could be in the offing.
“We anticipated a deficit,” Dello Russo said. “We weren’t sure just how much it would be.”
The city does not have enough money in reserves to cover the deficit. Sewer reserves have been drained, and the water reserve has only $34,000 in it. Over the years, the city used the reserves to pay for capital improvements to water and sewer lines.
A three-year savings plan proposed would replenish the funds. The city would set aside 10 percent of water and sewer revenues, and put them into a reserve fund.
“We would have access to those funds that we could supplement [the water/sewer budget], without having to go back to the board,” Dello Russo said.
Scenna said the funds could also help the city manage any increase in MWRA assessments on the horizon. “As we move forward beyond fiscal 2013, we must start to prepare, and be mindful, of added cost for the MWRA in upcoming years,” Scenna told aldermen. “The MWRA kept the increases low in recent years. That means they will have to rise in future years. We need a plan.”