BSU plans rate adjustment
 

One side effect of the current economy may surprise you: Utilities across the country have seen water use drop. People are being careful about everything they consume. The good news is that water conservation has increased; the bad news for utilities is that income has dropped. No one welcomes rate increases, but they sometimes are necessary and protect the long-term interests of a utility. BSU is in this very situation.

BSU has not increased rates since 2008, but increases are needed now to preserve the utility’s financial soundness and maintain its positive bond ratings. The utility is taking steps to refinance existing short-term, variable-rate debt with long-term, fixed-rate bonds. In the long run, this step will result in savings for the utility and its member-customers.

The utility has asked Bonita Springs City Council to approve three annual rate adjustments of 3.5 percent each, effective Sept. 1, 2010, 2011 and 2012. If approved, charges for a typical customer using 5,000 gallons of water per month would increase by $2.64 per month the first year, $2.74 the second year and $2.84 in 2012.

Before deciding to take this step, we scrutinized every expense, evaluated every position and looked for new ways to cut costs. The board eliminated staff positions, directed the use of reserves to decrease bond debt and save interest, capped the utility’s contribution toward employee health insurance, and decided to skip the annual water conservation calendar. We were able to make significant cuts, which allowed us to reduce the increase from the annual 5.5 percent originally considered. Make no mistake – these increases are necessary.

The 2010 Water and Wastewater Rate Sufficiency Study analyzed our operating costs, expected capital needs, anticipated revenue and other factors, to provide the basis for the increase. The proposed rates remain competitive with surrounding utilities, many of which are considering their own increases. BSU’s infrastructure and facilities are relatively new and in better condition than some utilities that face significant maintenance and replacement costs.
 
In addition to maintaining a strong financial position as we refinance bonds this fall, we must have adequate reserves in the event of a major disaster such as a hurricane or other catastrophic event. As you’ve come to expect, the BSU board and staff are dedicated to providing great value and a high level of service to our customer-members, even during difficult times.