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Missoula to seek utility rate increase to address water leakage, repairs
By Martin Kidston - Missoula Current,
2024-06-14
While the City of Missoula has made headway in addressing leaks in its water system over the past decade, leakage remains an issue and current utility rates won't enable the city to get ahead of the issue.
Public Works this week detailed its goals for its three main systems including water, wastewater and stormwater.
From reducing leaks and power consumption to replacing old infrastructure, it's likely to ask City Council this year to approve a rate increase across all three utilities in order to raise more revenue for long-term maintenance and repair.
“Water main replacement is really about leakage, but it's also about keeping our water infrastructure in good working order,” said Logan McInnis, deputy director of Public Works. “We want to avoid what happened in Atlanta in the last couple of weeks, where half or more of the city was placed on a multi-day boil order as a result of a catastrophic main failure.”
When the city purchased Mountain Water and placed it into public ownership, it used several bonds to pay for the system. It also factored in a main replacement schedule that looks to replace at least 1% of the city's aging water mains each year.
With 340 miles of pipe, McInnis said the city strives to replace 3.4 miles annually at a cost of around $10 million. Finding leaks in the city's gravel soils isn't easy, but the cost of leakage gets more expensive each year as utility rates increase and pumps continue to run.
“It's really the debt service for the purchase of the system and these main replacements that really establish the rate increases we'd like to request,” said McInnis. “These are very long-term assets that will benefit customers for many decades. So we think it's reasonable for those future customers to pay for the cost of replacing these mains.”
As proposed, water rates would increase 7% in Fiscal Year 25 and 8% the following two years. Wastewater fees would increase 9% over the next three years and stormwater 6%. McInnis said the total increase in FY25 would average about $4.75 per household.
“It takes time for these rate increases to go into effect to build that financial capacity,” he said. “We don't have a choice in complying with the financial metrics. If the rate increases aren't approved, we'd need to revise our budget, reduce our spending and not make progress on our strategic goals, because we have to maintain that debt coverage.”
Public Works believes the state will soon make regulatory changes around municipal wastewater, which will eventually carry a cost, and the department also looks to replace aging sewer lines and reduce the wastewater plant's carbon footprint. But it's also seeking a funding to increase to address water leakage in thousands of smaller service lines, or the lines that connect properties to the city's water mains.
Property owners are largely responsible for replacing those service lines when they rupture, and the cost of replacement can run as high as $15,000, McIinnis said. Public Works is seeking additional funding to bolster its water loan fund.
“We anticipate an increase in demand for the loan fund due to the code provision we proposed recently, that would use partial loan forgiveness to incentivize the full replacement of a service line rather than band-aid repair,” McIinnis said. “We feel like we need better financial tools for the customer.”
Public Works estimated that the city's water system has a leakage rate of roughly 50%. Of that, McInnis said half stems from leaking service lines. A 10-gallon per minute leak in a service line costs the citywide water utility $1,000 a year for power and chemicals.
Ramping up the subsidies to help replace antiquated and leaking service lines would save money down the road, McInnis said.
“We're proposing up to a $3,000 loan forgiveness because we'll save money from day one when that leak is repaired,” he said. “There are 16,000 galvanized pipes in our service zone. We don't think the city is on a sustainable path for maintaining our water services infrastructure.”
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