Report Prepared by: Ken F. Elwin, PE, Director of Public Works
Title
SUBJECT: Study Session for Sewer and Water Rate Study
REPORT IN BRIEF
Study session to review the sewer and water rate study.
RECOMMENDATION
For information and discussion.
Body
DISCUSSION
The City’s water utility is accounted for as self-supporting enterprise fund, with 100% of its supply sourced from pumped groundwater. Revenue is derived primarily from water service charges and must be adequate to fund the City’s operating and capital programs. The City last revised its water service charges in 2017, with set rates through 2021. The revisions maintained an existing yearly inflation index increase beyond the year 2021 [per Merced Municipal Code sections 18.36.045 & 050]. The City recently transitioned all customers to metered billing.
Residential sewer rates are a flat rate regardless of house size and occupancy. With the installation of water meters on all customer classes, the City desires to evaluate water consumption based sewer rates as a part of the study. Also, commercial sewer discharges are based on water consumption including irrigation usage, driving up commercial billings during the summer. The water consumption-based sewer charges need re-evaluation as part of the study. The City last revised its sewer rates in 2010 with a yearly inflation index increase; however, Council has approved resolutions stating the sewer rates would not increase in January 2022 and January 2023, pending the approval of the Sewer Master Plan and completion of the Sewer Rate Study. The City adopted its latest Sewer (Wastewater Collection System) Master Plan at its February 9, 2023, Council meeting.
On October 16, 2023, Council approved an agreement with Hildebrand Consulting, LLC, (Hildebrand) to conduct the sewer and water rate study. Subsequently, on April 21, 2025, Council approved a first amendment with Hildebrand due to delays caused by adjustments to staff salaries through the union negotiation process and to allow time to refine the future water and sewer capital improvement projects spending plans.
ATTACHMENTS
1. Presentation