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Shipshewana Lake sewer users to see rate increase

The LaGrange County Regional Utility District Board held a public hearing August 25 in Shipshewana to lay out the numbers behind a proposed rate increase for Shipshewana West and to take questions and comments.

The district had notified users in the area that it was looking at raising the monthly rates by $9.45, from $68 to $77.45, a nearly 14 percent increase.

The proposed rate increase was later approved by the board, to be phased in over the next four months. The first increase of $6.95 per month will occur immediately, with the remaining $2.50 taking effect on January 1, 2015.

Jeff Rowe from Umbaugh and Associates, which handled the rate survey to determine the rates, shared where the increases were coming from. As had been noted at previous board meetings, there were five areas that necessitated the increase.

The first was the change of the Michiana Church Camp from a flat rate to a metered rate. Rowe’s numbers showed that this accounted for $4.34 of the $9.45 increase.

The second was a change dictated by a change in state law that dropped the youth camp EDU (Equivalent Domestic Unit – the base for calculating the rates) from 0.267 to 0.125. This contributed $2.34 of the increased amount.

Rowe noted that overall, the district saw a 12.4 percent reduction in the Shipshewana West region below what had been previously used to calculate the monthly rate.

The Town of Shipshewana raised its wastewater treatment rates earlier this summer by 7.69 percent. This increase was passed along to the users in the system, accounting for $0.72 of the overall increase.

Fourth, the district increased the rate by $0.38 to cover expected inflationary impact on operating costs.

Finally, changes in the capital replacements and required coverage for the bond used to finance the project meant the district needed to set aside $8,300 per year, which equaled an increase of $1.69 per month. That amount is to cover replacement costs for physical items such as pumps and other equipment.

According to the numbers presented by Rowe, the district was looking at an expected yearly revenue of $183,000 before the increase in rates, while looking at a cost of service of $207,900, leaving it $24,900 per year short. That equates to just over $9.41 per EDU per month.

“This will generate sufficient revenues to meet the project costs,” Rowe said.

During the question portion of the meeting, the board clarified that the amount attributed to the town rate increase was also being billed to town residents. Part of that increase was due to the town hiring a new employee for the wastewater department, and not a hire by the county utility district.

When questioned about the authority of the district to pass along the increased town rate, the district’s attorney, John Gastineau, noted that the district “buys treatment services from the town. They are raising the price to us.” Gastineau later noted that the rate information for the town would be a matter of public record, available through the town offices.

There was also some questions on the initial partial billing done by the district and whether or not that billing was correct. Rowe stated that they were comfortable with the rate estimate that they had at the time. Gastineau added that the changes in revenue and an increase in costs now are what is causing the shortfall.

Rowe also pointed out that the projected costs now represent a full year of billing and that there may have been variances in the estimates made earlier in the project.

When asked if the board expected to raise the rates again within the next year, Gastineau noted that the district looks as far as it can into the future to calculate costs and revenue to set rates appropriately and that the district did not intend to raise the rates annually.