The Owensboro City Commission is expected to vote later this month on the water rate increase proposed by Owensboro Municipal Utilities. If approved, the rate would increase 9% starting this March plus an additional 9% increase in March 2025.
The City Commission only heard the first reading of the ordinance regarding the rate during Tuesday’s meeting. They meet again on February 20, when they are expected to vote on the rate proposal.
OMU officials said this year’s hike would result in a $1.94 increase per month for average customers, with next year’s average bill going up another $2.
OMU’s Utility Commission approved the proposal in January after looking for alternative measures. Following that meeting, when concerns were raised about the 9% hike 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.
They still found the 9% increase to be the best option for the utility company due to increased costs in chemicals, debt coverage, and other fiscal responsibilities.
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%.
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.
