Drinking water costs to go up in Morgan

Morgan City is raising its culinary water rates. Beginning next year, the base rate for all connections will increase by 12 percent, the first of several scheduled increases. Earlier this year, the city hired Zions Public Finance to perform a study of its water rates. City Manager Ty Bailey shared the results at the June 13 city council meeting. The news wasn’t good.

According to the study, as growth in Morgan City continues there is a need for the city’s water system to serve more customers. In 2022 there were 1,382 billing units (connections). That number is expected to increase to 1,793 by 2032, an increase of 411.

Operating expenses have increased due to inflation; they are expected to increase by about 5 percent yearly, and many parts of the system need repair. “Rates must be designed to keep up with these changes and must be structured to fairly and equitably serve customer needs,” the study says.

“Our water system is struggling,” Bailey said that night. “We've borrowed money twice for different projects, and the impact fee has been in the negative balance because just the cost of doing water projects it's incredible. We also have a lot of aging infrastructure in the ground that we just have not kept up on over the last 50, 60 years.”

“Every time we do a project we find pipes that are held together by who knows what and valves that don't operate so we just have a lot of a lot of work to do,” he added.

To maintain its current level of service and prepare to handle the increased growth on the system, the city has identified seven capital improvement projects totaling more than $9 million that will be needed by 2032. These include the purchase of a NMWUA system ($176,000), and chlorination of the Park Well ($210,000) which need to take place this year.  Aquifer storage and recovery next year will cost $444,000. A well siting study at a cost of $110,000 will need to be done in 2026 and completion of a Sunset Drive waterline loop ($494,000) is planned for 2028. Construction of a new North Morgan tank in 2029 is expected to cost $5,462,000. The city already has two outstanding debt obligations on its system with annual payments of more than $132,000 per year. (The study also factored in increasing impact fees from $1,800 per connection to $4,500).

The study suggested four possible options to address this negative cash flow: a rate increase with no bonding and three differently structured rate increases with bonding. If the city were to go with the first option, which Bailey described as the “worst case scenario” rates would need to be increased by 30 percent in 2024; by 25 percent in 2025; by 20 percent in 2026; by 15 percent in 2027; by 10 percent in 2028 and by 5 percent per year thereafter. This would increase the ¾-inch base rate from $31 in 2023 to $76.98 in 2030. 

Instead, after considering the options the city council voted to go with the fourth scenario. Under this option the base rate will gradually increase with a 12 percent increase next year, another 10 percent increase in 2025 and an annual 3 percent increase going forward. The base rate for each connection is set at 8,000 gallons per connection. 

A tiered usage structure beyond the base rate will be implemented next year.   Under these tiers, users of 8,001-16,000 gallons would pay $4.50 per thousand gallons; those using 16,001 to 32,000 gallons would pay $5 per gallon with the usage rate topping out at $5.50 per thousand gallons for anything above $32,000. These usage rates would increase by 10 percent in 2025 and by 3 percent every year thereafter.

With this option, city leaders are hoping that they will be able to get grants to help pay for a future water tank. They hope to issue a $4.6 million bond in 2029 to cover much of the cost. It is likely that the best grant the city could qualify for would entail a 50-50 match so the city would be on the hook for half of the price tag.

“It’s never easy to raise rates,” City Councilmember Tony London commented. “I mean it’s something you don't jump up in the morning saying, ‘Oh boy I get to raise water rates tonight,’ but you realize I guess sitting here that it becomes a necessary function to do that, and I would rather do that obviously step by step by step than just five years from now just to hit everybody with a $50/ month water rate increase.”λ