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HomeDEPARTMENTSUtility Billing...IMAGE...Frequently Asked Questions about Water Rates > Why Have Water and Wastewater Rates Continued to Increase?

Why Have Water and Wastewater Rates Continued to Increase?

The reality is that water and wastewater rates have increased steadily since 2010 primarily due to increases in the wholesale rates charged by NTMWD required to support regional water system improvements. NTMWD currently provides water for 1.6 million customers and that demand will only keep increasing as they must invest in projects to assure the availability and delivery of safe and sufficient water supply. The cities and communities that NTMWD serves share equitably in infrastructure investments that support our region’s ongoing population growth (expected to double within the next 50 years). NTMWD must charge cities to cover annual fixed costs for maintaining the regional pipelines and facilities, constructing capital projects and repaying debt, regardless of how much water is consumed.

MoreThanWater-infographic-Jan-2017The City like NTMWD has a responsibility to maintain a stable and adequate reserve fund balance and thus could not fully absorb these rate increases, which in turn affects the rates the City sets for its customers. The City recognizes these increases have affected customers and have made an effort to identify opportunities to minimize this impact to our customers whenever possible.

Another factor in the rate increases in the region has been the impact of conservation and to a lesser extent the 'take or pay' system used by NTMWD. Each City’s minimum annual demand, commonly referred to as ‘take or pay’ is set based on the year of greatest demand for water a city has placed on the regional system to ensure that each city pays for its proportional share of the total fixed costs for the regional system. Regardless of how much water a city consumes each year, the District is required to provide the raw water, treatment plant capacity, pipeline capacity, and pump capacity to meet this demand. This methodology ensures that NTMWD has the funding required to develop, operate and maintain supplies and facilities to meet the potential maximum capacity of water that each city may need. Our region is just recovering from a long drought and prolonged Stage 3 Watering Restrictions which affected water sales and in some cases reduced revenues and this has led to the recent concerns raised by some Member Cities. With conservation rightly the ‘new normal’ in the region, this must be taken into consideration when forecasting water sales and setting rates.

The City of Melissa and our residents answered the call to meet and or exceed the 10% water use reduction goal established by NTMWD and like others, the City experienced a reduction in the water used per meter due to watering restrictions and general conservation education. Melissa’s steady growth has allowed the City to keep pace with our minimum annual demand despite mandatory conservation, however NTMWD’s obligation to meet the growing demand due to rapid growth while facing a dwindling water supply due to drought, resulted in steady rate increases to the City like all other NTMWD customers. Visit www.ntmwd.com to learn more about the projects that are underway and planned.

The City has been able to build an adequate reserve fund balance thanks to steady and sustained growth in recent years. Over the last two years, despite an 23% increase in wholesale rates from NTMWD, the City was able to avoid raising water rates, held minimum fees steady and have only increased the sewer volumetric rate by 7.4%. Additionally, as part of the annual water rate study, staff has made a point to look at how to ensure the rates are equitable and incentivize and reward conservation and those efforts are continuing.

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