Charlotte City Council, at a budget workshop Wednesday, discussed scenarios that could raise water rates by about 4 percent next year.
Charlotte Water, faced with rising capital costs, said in December that water and sewer bills could go up about $51 a year on average for the next seven years.
The utility faces a couple of problems as it seeks more predictability in its revenues, Director Barry Gullet told council members Wednesday.
Charlotte Water subsidizes rates at the lowest of the four water-consumption tiers to help low-income customers. But the utility wants council members to rethink that approach.
While the number of customers in that tier is growing, the subsidy prevents revenues from also growing. “We’re not trending in a way that’s positive because the revenue doesn’t follow the customer growth,” Gullet said.
Customers in higher-consumption tiers, meanwhile, are using less water. That’s especially true in rainy summers when more affluent customers water their lawns less.
Gullet, responding to a council committee’s request, offered four options to generate the $346 million in revenue expected for 2015-16:
▪ Eliminate the Tier 1 subsidy, resulting in a 3.9 percent increase for typical residential customers who use 700 cubic feet of water a month.
▪ Leave the subsidy but increase the fixed “availability fees” that vary according to the size of the customer’s water meter. Typical rates would rise 4.5 percent in the next fiscal year.
▪ Eliminate the subsidy and increase the availability fees, increasing typical rates 4.6 percent.
▪ Eliminate the subsidy, increase the availability fees and freeze rates for the two high-consumption tiers. Rates would go up 4.1 percent.
Without making changes, rates would rise 3.8 percent in 2015-16. They rose 3.1 percent this year.