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L-EWA rate hike looming

Posted: January 13, 2011 6:45 p.m.
Updated: January 14, 2011 5:00 a.m.

Why are Lugoff-Elgin Water Authority (L-EWA) customers likely to see a hike in their rates? And how much will the increase be?

These are questions on the minds of many who reside west of the Wateree River­­­.

The answer is a combination of two elements, according to L-EWA General Manager Mike Hancock.

First and foremost, the authority’s bond requirements jump in the upcoming fiscal year, requiring the entity to have more cash on hand.

According to Hancock, the authority’s bond covenant mandates the organization earn a cushion of 20 percent greater than the amount required to make the payments. “That means we must have $2,774,813 remaining after paying the operating expenses,” Hancock explained. That figure is approximately $328,000 more than the previous debt service requirement. Debt service makes up just more than half of L-EWA’s expenses.

Add to that the sour economy of the past two years, which has cut into home building and economic activity, resulting in fewer new customers than the authority anticipated, and existing customers are going to be forced to cover some of the burden.

Hancock doesn’t hide from the fact his organization is increasing rates, but he said he wants to make clear the added rates aren’t going to be as high as some customers have speculated.

“I can tell you there is no truth to the rumor of a 75 percent increase in rates,” Hancock said.

In a draft for fiscal year 2012’s budget, Hancock lists the new rate for the residential minimum at $33.50 for 2,000 gallons and $4.55 for every 1,000 gallons beyond that. That compares with the current rate of $24.32 for 2,000 gallons and $4.51 for every 1,000 gallons beyond. These rates include a $24.40 “facilities charge,” formerly known as an “admin fee.” Hancock said “facilities charge” is a more adequate term than “admin fee.”

“This component (the facilities charge) provides the other portion of total water sales figure not covered by the cost of a unit of water,” Hancock states, adding that the facilities charge is spread evenly over all tap holders -- businesses, industry, government and residential customers.

The draft lists revenues at $5.03 million and expenses at $2.25 million. The bulk of revenue comes from water sales ($4,714,045), while the largest chunk of expenses comes from salaries and wages ($977,000).

The L-EWA board of directors hasn’t taken official action on the fiscal year 2012 budget, which doesn’t have to be passed until June.

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