On Oct. 16, discussion began before the Mineral County Board of County Commissioners on a series of proposed utilities rate increases, expected to raise about $20,000 each year for Hawthorne Utilities.
Customers in Hawthorne will expect to see their water rates increase by 1 percent a month each year for the next five years; sewer rates increase by 15 cents a month this year, and an additional 2 cents a month each year for four years; and garbage service to cost 5 cents a month more this year and every year until 2018, if the planned increases are approved.
Under the proposed rates, an average family of two in Hawthorne will pay 78 cents each month more in winter months, and 97 cents a month more in summer months for all their utilities. An average “large” family will pay an additional $1.15 each month for utilities during the winter months, and $1.18 during the summer months, utility documents show.
If the rate hike plan is approved, the board will review the rates each year.
“We believe that if we do a small increase to each department we will eventually, probably not in our lifetime, but we will eventually catch up to where we should be,” said Ana Fitzgerald, office manager at Hawthorne Utilities. “We’re trying to keep up with the cost of expenses growing annually, but our rates not.”
Fitzgerald said the utility opted to slowly increase rates to avoid “sticker shock” when rates suddenly jump to accommodate long standing budget shortfalls.
No decision will be made on the proposal until the first time the board meets in December, after the various utilities in the county are audited.
“We’re doing water garbage and sewer all at once because they’re all billed on the same bill,” Fitzgerald said.
At current water utilities rates, Hawthorne Utilities runs at an annual loss of 19 percent annually in Hawthorne for the water budget, Fitzgerald said.
The utility loses $174,200 for equipment depreciation in Hawthorne each year documents show. Those losses account for the vast majority of the $200,000 shortfall each year.
Much of the depreciation budget item is unfunded because it measures how much value the utility’s equipment loses each year, Fitzgerald said.
“Depreciation doesn’t have to be fully funded, but you’re supposed to try and eventually fully fund it,” Fitzgerald said. “Pieces of equipment age out, depreciate out at different times, so we’re never going to be expected to fully fund it.”
The goal is to set aside enough money for depreciation that equipment can be replaced when it breaks down, Fitzgerald said.
The operating expenses for the utility also shows a line item for Other Public Employee Benefits, which appeared on the utilities budget for the first time in 2013, and accounts for a nearly $50,000 unfunded liability.
Fitzgerald said this number will change each year, and is generated by actuaries.
“Eventually they should be fully covered, but the auditors [who examine the utility’s budget], like everyone else, knows they can’t be fully covered,” she said.
The sewer account runs at a 9 percent budget loss. Its deficit is listed as $42,000. Depreciation and OPEB accounts for about a third of the total budget.
The garbage fund in Hawthorne runs at a $35,000 loss, which is 12 percent of the budget. Depreciation and OPEB combined cost the garbage accounts $61,000.
Fitzgerald said it’s crucial to remember these accounts can’t be mixed.
Stephen Gustafson, director of Hawthorne Utilities, said the rate increases are necessary to combat the increasing cost and declining revenue of the utilities.
Fitzgerald said revenue has been stagnant for the utility since 2008 and, despite a declining number of customers, costs continue to rise.
“Our goal has been to establish the long term financial stability for Hawthorne Utilities, water, sewer, garbage, Mina [and] Luning Water,” Gustafson said in the meeting. “We want to look at the long term picture, not just one snapshot. We want to become proactive instead of reactive. We don’t want to just keep throwing water on the fire. We want to look at long term.”