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posted: 9/26/2012 5:30 AM

Why suburban water rates are skyrocketing

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  • DuPage Water Commission contractors Kevin Sweeney, right, and Wally Callahan are building a water metering station in eastern Naperville, one of several capital projects the financially troubled agency is undertaking.

       DuPage Water Commission contractors Kevin Sweeney, right, and Wally Callahan are building a water metering station in eastern Naperville, one of several capital projects the financially troubled agency is undertaking.
    Scott Sanders | Staff Photographer

  • Highest water cost increases

    Graphic: Highest water cost increases

  • Water rates

    Graphic: Water rates

 
 

It might be time to fix that dripping faucet or running toilet.

In the last year, residential water rates in 26 suburban communities have increased on average 16.5 percent. For three of those towns, costs have spiked more than 25 percent above the 2011 rates.

Homeowners in these suburbs are paying an average of 85 cents more for 1,000 gallons of water than they did last year, or about $6 more a month. And there are more rate hikes on the horizon.

These are suburbs that buy Lake Michigan water from Chicago, which instituted a rate hike that will amount to a 90 percent wholesale water rate increase by 2015.

This year, Chicago is charging 50 cents more for every 1,000 gallons of water than it did last year.

Chicago's rate hike is only one layer of additional costs charged to suburban homeowners.

The DuPage Water Commission, for instance, passed along Chicago's hike and then tacked on another 19 cents per 1,000 gallons for those in the nearly two dozen towns it serves. That money is being used to replenish the agency's reserves and cover costs associated with financial mistakes that were made by a previous administration.

Then, some towns are tacking on even more -- another $1 per 1,000 gallons in Winfield.

"We were concerned that we were not keeping up with what the true costs were," said Winfield Village Manager Curt Barrett, whose town gets water from Chicago via the DuPage Water Commission. "In the past, we were reticent to increase rates, and we had some catch-up to play."

Winfield residents pay $1.69 more for 1,000 gallons of water than they did last year. That's the biggest swing in water prices among the 26 suburbs analyzed. Last year, Winfield's water rate was $7.76, but today it's $9.45.

For homeowners using the industry standard of about 7,000 gallons of water a month, Winfield's total rate increase translates to a $142 spike in this year's water bill. By 2015 the Winfield water rate is expected to be $12.25 per 1,000 gallons. That would amount to a $377 increase above 2011 annual water costs for residents averaging 7,000 gallons of water each month in Winfield.

"Other towns subsidize water rates with other taxes, but Winfield doesn't do that," Barrett said.

These hikes affected only water delivery to homes. Sewage costs are also a significant part of a homeowner's water bill but were not affected by any of the water rate hikes.

Many municipal leaders are unhappy with Chicago's imposed rate hike. They complain that poor planning by Chicago caused the city's water system to fall into disrepair and now those infrastructure costs are being covered on the backs of suburban residents. Some also decry a lack of accounting from Chicago indicating that all the money raised through the rate hikes is being spent on water projects.

The seven Cook County communities that make up the North Suburban Municipal Joint Action Water Agency are investigating the possibility of getting their Lake Michigan water from another lakefront town when the contract with Chicago expires in another decade. The agency will receive an update on that study at today's 6:30 p.m. meeting at Schaumburg's Prairie Center for the Arts.

"In 2023 when our contract comes up, Chicago will have water rates to benefit us, or there are other places to get water," said Elk Grove Village Mayor Craig Johnson. "Obviously, now in hindsight, we're being held hostage. It's not being good neighbors."

Chicago's Assistant Water Commissioner Tom LaPorte said repairs to the city's water system benefit everyone by reducing leaks and thereby eliminating the cost of drawing water that goes nowhere.

"The integrity and maintenance of the entire system is necessary for it to serve all of our customers," LaPorte said. "For example, by replacing aging water mains in the city, we not only cut down on water waste, we prepare for the expected population and industrial growth in the suburbs we serve. We will be able to meet suburban need rather than wasting the water through leaks and revenue through emergency repairs."

LaPorte said he is uncertain what impact Chicago would feel if suburbs started getting water from someplace else.

"We believe it would be a very challenging undertaking for any of our suburban customers to switch providers," he said. "We would regret the loss of a customer."

Helping cover the cost to repair Chicago's water system isn't slowing some suburban municipalities from moving forward with similar water projects, even if it means mammoth rate hikes.

"One of the observations in our water study is we're not spending enough money to keep up with capital needs of the system," said Wheaton City Manager Don Rose. "It has been somewhat of a perfect storm in that the water commission rates are going up along with Chicago's and then we have a number of large capital projects this year."

Under a proposal before the Wheaton City Council, the city's water rate could increase to $8.99 for every 1,000 gallons by 2015. That's more than double the 2011 rate of $3.54 and amounts to a 154 percent increase.

The warm spring and dry summer was a boon for towns because of increased water use and resulting revenue, but don't expect that to push rates lower. However, the extra revenue earned over the summer will allow some towns to avoid borrowing for water system upgrades, saving taxpayers interest costs, at least.

Of the 26 suburban water rates analyzed, only Carol Stream, Oakbrook Terrace, Addison, Rosemont, Glen Ellyn and Bensenville did not increase their rates above the hikes imposed on them by Chicago and the DuPage Water Commission. But that doesn't mean rates won't eventually go up.

Bensenville hasn't passed on any of the increases, yet.

"We chose to absorb those costs passed on to us just because of the timing," said Bensenville Village Manager Michael Cassady. "We're finalizing a water and sewer rate study. Our residents have been very vocal about the cost of water in our community, so that's been something we've been challenged to try and figure out how to offset. I'm hopeful there's a component of fund balance to soften that. But we're looking at possibly a more incremental increase."

The law of unintended consequences also comes into play. Since it now costs more for the suburbs to provide water service because of the rate hikes, these towns need to sock away more in reserves to cover any unforeseen emergencies that may arise. That's money that can't be used for any other purpose.

"We carry a 30-day operating reserve," said Jim Holzapfel, Naperville's water utility director. "The costs increased, so we had to bump up our reserves an extra $38,500."

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