The Greater Johnstown Water Authority has developed a multiphase rate increase plan.
It will include annual rises in cost for every residential customer, beginning in 2015, and a $1 per month capital surcharge starting on Jan. 1, 2014.
But before then, the board plans to address the discrepancy between rates paid by different customers on the system that supplies numerous municipalities throughout the region. Currently, the price for pumped water is $7.81 per 1,000 gallons, according to William Gleason Barbin, the authority’s solicitor. Customers on the scale for gravity-fed water pay $5.94.
Historically, water was pumped to locations in higher elevations, while gravity sent it to customers in lower lands. All water in the system, however, has actually been pumped for more than a quarter-century. So, the customers on the gravity rate were receiving a discount even though they were getting the same service.
Beginning with all bills dated after Nov. 8, a uniform rate of $7.81 will be used for all residential customers.
“They haven’t been gravity for years and years, since the Riverside Treatment Plant opened in 1986. They haven’t really been gravity,” said Barbin. “Before then, the people we call the gravity customers, their water wasn’t pumped at all. It came out of the North Fork Dam, didn’t go through a filtration plant, went straight into the pipes and the pressure from the North Fork Dam pushed it up into their houses, so the authority always gave them a break. The reason for that was because we bought this authority from Bethlehem Steel in 1964 and Bethlehem Steel was at the bottom of the hill.”
The first phase will also include the $1 surcharge.
Rates will then increase by 10 percent for bills dated after Jan. 1, 2015, and another 10 percent after Jan. 1, 2016. An automatic minimum 3 percent increase will be put into place at the beginning of every subsequent year.
Authority members unanimously approved the rate changes in order to meet debt service obligations and make capital improvements, such as anticipated work on the North Fork Dam.
“There are things coming in the future that are going to cost us a lot of money,” said Chairman Edward Cernic Sr. “We have to cover that. It’s that simple.”
Also, the authority needs to annually bring in enough revenue to cover 110 percent of its expenses, as required by its bond agreement.
“Next year, we were not going to meet coverage if everything continued exactly as it was,” said Barbin.
“We would be in violation of our bond covenant. If you do that, the least of the things that happen are your rates on the bond go up.”
The authority generated $7.9 million of revenue in 2012 with $5.8 million coming from residential rates.
Dave Sutor is a reporter for The Tribune-Democrat. Follow him on Twitter at twitter.com/Dave_Sutor.