Owensboro Municipal Utilities Commission approved a 9% water rate increase this March and again next year. While it is not in effect yet, the City Commission will now vote on the rate before it can go into effect.
If enacted, that would equate to the average OMU customer’s bill going up by about $2 per month.
OMU representative first presented their proposal to the Utility Commission in December. Following that meeting, when concerns were raised about the 9% increase each of the next 2 years, OMU Manager of Planning Laura Chapman and other financial staff members returned to the drawing board to find where some of the predicted forecasts could be adjusted.
Chapman said they adjusted General and Administrative expenses to be inflated by 3.5% rather than 5% in Fiscal Year 2025 and 3% thereafter. They also forecast the pension rate to be the same in the FY 2024 budget at 23.35%.
However, she said, “Our request for approval of 9% remains the same.”
Chapman said the proposed 9% would go into effect in March 2024, with an additional 9% increase in March 2025. Officials estimate the average residential customer bill to increase by $1.94 a month starting on March 1, 2024, and then increase again by $2 a month staring in March 2025.
President of Utility Financial Solutions Mark Beauchamp said that the Renew and Replacement rates (R&R) for wholesale water purchasers will need adjustments because they are used seasonally — only about 6 months a year. Those rates would bump up from 1.25% to 2.2%.
Beauchamp said that much of OMU’s current revenue requirement is being driven up by additional funds in transmission and distribution, customer service and information, and other internal expenses. He said that by making rate adjustments, OMU is making sure their debt coverage ratio is above the 1.45 mark, which enables them to continue working with their providers.
Now that the plan is approved by the Utility Commission, it will be introduced to the City Commission and could be voted on at their February 20 meeting. The rates, if approved, have an effective date of March 1.
