City's water/sewer rates study includes less than inflation increases

Published on November 16, 2022

Photo of person drawing water from a tap

GRAND RAPIDS, Mich. –  The Grand Rapids City Commission yesterday heard an overview of the 2022 water and sewer rate study for rates effective January 1, 2023. Based on the preliminary rate study, City of Grand Rapids rate increases of 6.27 percent to water rates and 1.27 percent to sewer service rates are recommended – wholesale and retail partner communities are subject to varying rates. Comparatively, both system increases are less than the current rate of inflation, with annual inflation for the 12 months ending September 2022 at 8.2 percent.

City staff conduct a comprehensive review of operating and capital costs related to water and sewer services each year for the purpose of recommending water and sewer rate adjustments for Grand Rapids and its customer communities – the cities of East Grand Rapids, Kentwood and Walker, the county of Ottawa, and the townships of Ada, Cascade, Grand Rapids, Gaines, Tallmadge, Caledonia, and Wright.

During her presentation, Utility Financial Officer Jenessa Carter told the Commission that based on the suggested rate increases, the typical Grand Rapids customer will likely pay $7.98 or 3.32 percent more for water and sewer services quarterly. Rates for retail customers living in Walker, Kentwood, Cascade Township, Grand Rapids Township and Tallmadge Township and wholesale customers living in East Grand Rapids, Ada, Gaines, Caledonia and Ottawa vary due to various allocations of capital infrastructure costs as well as usage trends that effect rates in each jurisdiction.

Both Systems experienced fluctuations in the three-year average of billed volume that made an impact in the rate changes. The Water System experienced a 1.42 percent decrease in the three-year average of billed volume, largely due to wet weather experienced during peak irrigation times. This results in an upward pressure on rates for the Water System. The Sewer System experienced a 0.89 percent decrease in the three-year average of billed volume but a 4.13 percent increase over 2021. Billed volume increased year-over-year largely due to the lifting of COVID-19 pandemic restrictions; however, the three-year average fell as 2022 volumes did not outpace 2019. With overall consumption down, this causes upward pressure on rates for the Sewer System as well.

“Asset management remains a priority for both Systems, and asset additions, combined with the increase in the return-on-investment rate, are the biggest drivers in this year’s study,” Carter said. “Investments in water main replacements in the City of Grand Rapids and investments in assets at the Livingston Pump Station and Wilson Pump Station that are shared among several partner communities were the major drivers for the Water System rate increase. Integrated system improvements at the Lake Michigan Filtration Plant (LMFP) also contributed to the increase. Furthermore, the Water System is continuing to focus on private lead service line replacements for City of Grand Rapids residents in accordance with the Environmental Protection Agency (EPA) and The State of Michigan Environment, Great Lakes & Energy Division (EGLE) regulatory requirements. With the Sewer System, investments in sewer mains in the City of Grand Rapids, including the first phase of the shared Market Avenue Trunk Sewer Relocation project were major drivers in this year’s study. There was also work at the Wastewater Resource Recovery Facility (WRRF).”

A PDF of the PowerPoint presentation can be found at: https://grandrapidsmi.gov/files/assets/public/meetings/city-commission/2022-11-15/wrs22-rate-study-presentation-11-15-22-commission.pdf. The Citizen's Guide to the 2022 Preliminary Rate Study (PDF) can be found at: https://www.grandrapidsmi.gov/files/assets/public/departments/water/files/rulesregsrate-study/rate-studies/2022/citizens-guide-to-the-2022-preliminary-rate-study.pdf

The public is invited to comment on the report and rates through December 5. Comments will be reported and considered as part of the FY2024 budget planning process. A copy of the annual rate study is available online at https://www.grandrapidsmi.gov/rate‐studies and in the City Clerk’s Office. Customers wishing to make official comment can do so by sending a correspondence to the City Clerk’s Office, 300 Monroe NW, Grand Rapids, MI 49503 or by sending an e‐mail to info@grcity.us.

The Grand Rapids City Commission is anticipated to approve the rates through resolution on Tuesday, December 13.

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