Utility Rate Study Conducted to Ensure Sustainable Future

City of Palm Coast Conducts Utility Rate Study to Ensure Sustainable Future

The City of Palm Coast has completed a comprehensive utility rate study, which highlights the need for strategic planning to ensure a sustainable future. The findings of this study reveal that the existing monthly water and wastewater rates should be updated to cover the forthcoming operating expenditures, capital funding requirements, debt service payments, and bond coverage requirements.

The rate study identified several focus areas:

Continued Inflationary Impacts: Rising operational costs, including increases in commodities like fuel, power, and chemicals, have exerted significant pressure on the budget. To maintain a high level of service, these cost increases must be addressed through reasonable rate adjustments.

Capital Improvements: The City’s ten-year plan encompasses essential upgrades and system capacity improvements, such as water treatment plants, wastewater treatment plants, wells and wellfields, PEP system upgrades, and the construction of a maintenance operations complex. These investments are vital to ensure the city’s infrastructure can meet the demands of a growing population and comply with the latest industry standards.

Regulatory Compliance: As regulations evolve, it is essential for the City of Palm Coast to meet the new rules and regulations set forth by our regulatory agencies. Complying with these requirements is crucial to ensure the health and safety of our community.

Aging Equipment: A significant portion of the city’s utility infrastructure has been in service for over 50 years. Renewing and replacing this aging equipment is essential to maintain a reliable and efficient utility system.

Financial Creditworthiness: Ensuring the City’s financial creditworthiness and maintaining favorable bond ratings is essential for accessing necessary funding for future projects. Responsible rate adjustments are a fundamental component of this financial stability.

The City Council will discuss two options to address these rate adjustments. Option 1 proposes a 12.5% increase, effective October 1, 2024, while Option 2 suggests a 6% increase on April 1, 2024, followed by another 6% increase on October 1, 2024.

A typical single-family residential monthly bill based on usage of 3,800 gallons is currently about $86 per month. With the suggested Option 1 increase, it would be approximately $97 per month starting October 1, 2024.

A focus was applied to the rate study to protect our seniors and low-income residents, and to promote conservation efforts in our community’s raw water supply. To accomplish this goal, the monthly base facility charge was held at its current rate with no increase. A new Lifeline Tier was created for those using 0-2,000 gallons of water monthly. If Option 1 is selected, these users would see a more minor increase in their bill of approximately $4.54.

In addition to these operating costs, there are capital costs or construction capacity fees, which are typically paid by contractors or developers. These fees are designed to recover the cost of capacity to serve future growth and to minimize the cost burden to existing customers over time. If the proposed rates are approved, impact fees for water and sewer will increase by 50% over the next four years, ensuring that the cost of growth is appropriately distributed and shared by those who benefit from expanding infrastructure.

We understand the challenges posed by these necessary adjustments and the impact they may have on our residents. However, it is essential to highlight that operating reserves are projected to be less than the required minimum by 2025 and exhausted by 2027 if no action is taken. The City of Palm Coast is dedicated to responsible and proactive planning to safeguard the city’s infrastructure, financial stability, and long-term growth.

The City of Palm Coast encourages all residents to engage in water conservation efforts actively. By being mindful of water usage, individuals can collectively contribute to a more sustainable and environmentally responsible community while reducing their overall monthly bill. To learn more about effective water conservation practices and discover valuable tips for reducing water consumption, visit the city’s website at https://www.palmcoast.gov/customer-service/water-tips. Also, learn how to read the Palm Coast Utility bill and other helpful information on this page: https://www.palmcoast.gov/customer-service

The results of the utility rate study will be presented to the City Council for discussion on November 14, 2023, at 9 a.m. in the Community Wing of City Hall at 160 Lake Ave. The city encourages residents to participate in this critical dialogue as it takes steps to protect its infrastructure for the future, meet the demands of growth, and remain fiscally responsible.

Stay informed with the latest news and information from the City of Palm Coast by following us on Facebook, InstagramTwitterYouTube, and LinkedIn. You can sign up for weekly updates by visiting www.palmcoastgov.com/government/city-manager/week-in-review.