Suffolk has region’s highest water rates
Published 8:30 pm Friday, May 27, 2022
Even after factoring in different billing methods and calculations, Suffolk has the highest water rates among localities in Western Tidewater and South Hampton Roads, a News-Herald analysis found.
But the question that comes to the minds of city residents is why.
Gloria Spencer, a newer resident in the city, said the cost of water is extreme and noted the frequent complaints by residents on the Nextdoor social media website. In a letter to the Suffolk News-Herald, she said she paid $158 in March for her water, which is higher than any of the bimonthly bills she had in the 30 years she lived in Chesapeake, including summer months and with four people in her home. Currently, she lives with her husband and only does eight loads of laundry in a month and rarely uses the dishwasher.
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“We need someone to help us (and) demand answers,” Spencer said.
Suffolk charges residents $10.31 per 100 cubic feet, the equivalent of 748 gallons. That rate is set to increase July 1 by 12 cents, or 1%, to $10.43. The rate, when calculated per 1,000 gallons as it is in some south Hampton Roads localities, comes out to $13.94.
Isle of Wight County, which will be charging $11.76 per 1,000 gallons used beginning in July, has the next highest cost for water. Conversely, Virginia Beach has the lowest rates, charging $4.90 per 1,000 gallons, and that rate will remain unchanged in the new fiscal year, which begins in July. The region’s average water rate is $8.40 per 1,000 gallons.
Several things factor into residents’ water rates, according to city Public Utilities Director Paul Retel. They include any projects in the city’s capital improvements program and plan, the city’s annual operating budget, debt service from bonds in financing water-related projects — 40% of his department’s budget is tied up there in building up its water system. That’s something Ratel compares to having a mortgage on a house.
“The 40% debt you’re paying on, you’re paying on putting pipes in the ground,” Retel said, (the) treatment plant to go ahead and expand the system out there. … You’ve got to build a system in order to serve the customers.”
The city, about two years ago, hooked up the last of 37 community well systems, or privately owned ones, to the city’s water system.
He said that is important because the city had to extend transmission lines, the larger diameter pipelines, to feed those areas and then hook them in. In some cases, the city had to make changes to the distribution system to connect them to the city’s system.
“So in order to do that, you have to either cash finance it or sell bonds,” Retel said. “So that 40% of our operating budget, that’s bond debt. Some of that was to go ahead and do that and then expand the system because you have to maintain your system in a state that’s ready to serve the customer.
“It can’t be that a customer moves in, a large customer, and all of a sudden we’re caught short and we can’t provide them the water. So you look 10 to 15 years down the road. You’ve got CIP (capital projects), you’ve got bond debt and then you’ve got the annual operating budget.”
Ratel said the city has also had to project capacity building out, not just for the year’s higher use days, but years and even decades out for when new people or businesses come. He noted that as a member of the Western Tidewater Water Authority — made up of Isle of Wight County and Suffolk — the city has secured enough water to meet the demands of existing and future customers for the next 26 years.
He also noted the city’s “relatively young” water system, which has been operational since June 1982 when the city’s G. Robert House Jr. Water Treatment Plant in Chuckatuck opened, is one that has more than 497 miles of water mains and is supplied by potable water from it and Portsmouth’s water treatment plant also located in Suffolk. At the time the House plant opened, it cost $6.8 million.
The city spent more than $9 million about 10 years ago to upgrade its plant, and spent about $8.8 million on the plant’s most recent upgrades from 2019 and 2020.
The city gets 2.54 million gallons of water per day from Portsmouth, per a 1997 agreement.
Portsmouth operates the Lake Kilby Water Treatment Plant, which uses a conventional surface water plant. The Portsmouth water serves the majority of Suffolk’s downtown area, a portion of the southern part of the city and part of the Nansemond Parkway near the Chesapeake border.
Suffolk’s surface water comes from Lone Star Lakes, raw water from Norfolk’s Western Branch — which is actually in Suffolk, owned by Norfolk, and is treated in Suffolk — and the Crumps Mill Pond reservoirs, along with several production wells.
The other issue that factors into higher rates, he said, is Suffolk’s smaller customer base when compared to other cities in Hampton Roads. Currently, there are about 27,000 metered customers. By comparison, Virginia Beach has more than 136,000 customers.
Why does the number of customers matter?
“They’re able to spread those costs out on those customers more than we can with our customer base,” Retel said. “(And) our transmission mains don’t go geographically to all of Suffolk because some of it is fairly rural. You think about northern Suffolk and you think about the downtown area, that’s a stretch.”
The city also treats groundwater and is in need of an upgrade that is a part of the CIP.
Retel said that in the early 2000s, the rate of growth in the city was between 20% and 30%, “and so they were building capacity at that time, treatment and transmission capacity, in order to serve those customers.”
He noted the slower development around 2007 and 2008 when the economy took a nosedive, but it has been picking back up in the last few years with steady residential and commercial growth.
Developing the rates, reading the bill
The city works with an outside firm to develop a rate model that factors in such things as the CIP, operating debt and the city’s annual budget to determine where rates should be, Retel said.
The bonds the city has sold affect the rates, and it is required to have a minimum of 90 days of operating and debt service reserve on hand, he said. That also goes into the rate model, along with debt service coverage, or the amount of revenues over reserves.
“If you ask the question as far as Suffolk’s rates being high,” Retel said, “I would point to the young nature of the system, the extent of the system … geographically what we have to serve, and then when that system was being built, the bonds that were sold, 40% of our budget is paying down that debt.”
He said the city is paying for more by cash rather than bonds, which helps when it does a rate model because it doesn’t have to pay interest on it. That, in turn, has kept rates at least a little lower.
“A couple of times a year,” Retel said, “we look at the projects and we think, ‘OK, do we need to do this one now? Can we defer this one right now?’ Maybe we may not be able to defer this one because the condition of a certain asset.”
Almost 90% of the expenses for public utilities are fixed costs, but about 70% of revenues are variable and based largely on people’s water consumption.
“That’s a variable that goes up and down,” Retel said, “so we try to predict every year what our revenues are going to be, and sometimes that can be a little tricky.”
The department models its charges by equivalent residential unit, or roughly a household. What it’s looking for is how many ERUs the system will add with new construction and new connections to the city’s system. It is taking into account economic forecasts and the past few years. A typical water bill, Retel said, sees a family use about 500 cubic feet of water, or about 3,740 gallons. On a bill that combines water, sewer and meter charges, it comes to about $100.65, Retel said. The upcoming rate increase will add about $1.10 to the bill.
The city of Suffolk’s part of the bill includes a monthly meter service charge — Retel calls it a “readiness to serve” charge — along with the water consumption charge and a sewer collection charge. The bill also includes Hampton Roads Sanitation District charges for wastewater treatment.
The rates generally do not increase after a budget is approved, which typically happens in May for the fiscal year beginning July 1.
Residential water rates, per 1,000 gallons
Suffolk: $13.94 (adopted fiscal 2023 rate)
Isle of Wight: $11.76 (adopted fiscal 2023 rate)
Norfolk: $7.58 (proposed fiscal 2023 rate)
Portsmouth: $6.37 (adopted fiscal 2023 rate)
Virginia Beach: $4.90 (current and adopted fiscal 2023 rate)
Franklin: $5.35 ($12.62 flat fee plus $2.83 per 1,000 gallons)
Southampton: $7.25 (for first 4,000 gallons use, $7 every 1,000 gallons after, proposed FY ‘23 rate)
Note: Rates do not include service fees or HRSD charges.
Average monthly water bill
Meter charge (five-eighths in.): $12.75
Note: The average monthly water bill includes water and meter service charges, but does not include the sewer charge or the Hampton Roads Sanitation District wastewater fee. It is based on 500 cubic feet of water use, or 3,740 gallons of water used by a family per month.
Reacting to a dramatic increases
People who see a dramatic bill increase typically will have either a leak or much higher water consumption, Retel said. The city will look through its billing system, which it shares with HRSD, then ask the customer whether there were leaks or any activities that would have caused a dramatic bill increase.
If the answer to those questions is no, then it will most likely send a technician to the residents’ home to do a leak check on the meter. On older meters, if they are spinning rapidly, it usually indicates higher water usage.
Using newer meters, the city can also determine over the most recent 30-day period, down to the hour, when someone in a household was using water. Staff in the city’s public utilities department will look at the data and use that to ascertain a leak. Retel also said that toilets are a big cause of increased water usage.
“If we see that (for) 24 hours there’s water consumption, there’s either a leak or you’ve got something going through your toilet, the faucet’s running or something,” Retel said, “and nine times out of 10, we can get this thing figured out with the customer.”
He said it is rare for a bill to jump due to an issue with the water meter.
The city has a leak adjustment policy for the city to credit a customer a portion of it if there is an internal leak, and it’s possible to get full credit on the sewer side of the bill if the leak is on the outside.
He noted a recent issue with someone who lived by themselves whose water consumption went from 748 gallons to 26,928 gallons. This person, he said, called right away.
“Hers turned out to be a toilet,” Retel said, “and she had a plumber go in there with her and look at it, and replaced some things, and we gave her a credit.”
If someone has an issue with a large increase, Retel advises them to contact public utilities’ customer service as soon as possible, because typically, any leak adjustment would not be given for anything over three months.
“We want to work with the customer,” Retel said. “If you see something that you think is odd, reach out to us and let us work with you.”