Hello, Middleburg! The column last month by Vincent Bataoel: “The Next Five Years” alarmed me. In it, he writes his first priority as “… Mayor of Middleburg: [is to] Reduce water rates – the residents and businesses of the Town pay two to three times more for water and sewer service than any other municipality in Loudoun or Fauquier.”
Well! That may reflect a common misperception, but there is much more to the story. Many of his statements struck me as reckless. If others do not address them this month, I will in October.
This column presents results of an analysis I worked on while Council was away (no August work session). I studied water and sewer utility rates, and bills for various consumption levels in small Loudoun towns, comparing them to ours. The following explains the cost issues and trade-offs to present an accurate picture.
ISSUES & TRADE-OFFS
Middleburg is small, with fewer than 800 residents, but has a water utility system that would cost between fifteen to twenty million dollars to build today. However, it has only 484 customers. Reducing our rates would lower quality standards by failing to fund costs unless we decide to encourage dense, suburban growth around town to add higher-paying customers to subsidize rates inside the town. Middleburg’s tiny customer base makes reducing costs difficult.
Long-standing policies maintain our small, rural village. One policy, not extending utility service outside town limits, includes trade-offs. While this keeps Middleburg small by discouraging unrestricted suburban sprawl around us, it reduces prospects to grow the utility’s customer base to share costs and lower rates.
Water utilities are highly regulated by the Virginia Departments of Health and Environmental Quality. Ours meet the same standards that any town and city in Virginia must meet, but with few customers to spread costs. Middleburg’s 484 customers cover operations, maintenance, and periodic replacements.
Hamilton and Round Hill provide significant service outside their towns, with more customers outside than inside. Outside customers pay higher rates than inside customers. These customers are in a captive monopoly and subsidize in-town customers. Our six water-only customers do pay higher rates than inside town but do not affect in-town rates.
The trade-off is the hard edge between the village density in Middleburg and its surrounding low-density neighbors, versus somewhat lower utility rates and a town surrounded by suburban sprawl.
Until the early 2000’s, Middleburg tried low rates. The utility did not pay for anything unless it was clearly broken and people complained. For example, Middleburg was not even maintaining its water towers. What resulted was a utility clearly in decline by 1995. I am happy to report that this is no longer the case.
I focused on the water utility rates in Middleburg and other small towns in Loudoun (from their web sites) with modest, but varying, numbers of customers. Middleburg’s base is significantly smaller, with 484 customers – 36% of the average of the towns. My analysis incorporates varying factors. Some towns use tiered rates, that is, each successive level of consumption is more expensive than previous levels. Hamilton uses two tiers, and Purcellville has seventeen. The others, including Middleburg, use flat rates – each gallon consumed costs the same. Hamilton and Purcellville are the only towns that also charge water and sewer service fees in addition to their rates. Only Lovettsville still bills quarterly, rather than bi-monthly.
The following charts compare the bills for the towns, alongside the three times higher claim by Mr. Bataoel. The 5,000-gallon level represents moderate-consumption for a residential customer over two-months. For reference, 5,000 gallons over two months averages 82 gallons per day and 576 per week.
The charts above show weighted averages (in/outside town) for 5,000-gallon water and sewer costs by town and compare costs from other towns to ours. As you can see, Middleburg customers do pay more. However, Middleburg customers are clearly not paying two to three times more than other towns pay!
Again, the trade-off is that Middleburg keeps a small village atmosphere surrounded by rural, low-level countryside, with a sustainable system, but pays a bit more for water (with stable costs over time). Where would you rather live?
Middleburg rates now include foreseeable maintenance and operational costs to run the water treatment and wastewater infrastructure. Our rates also include major replacement costs by each asset’s expected useful life span. This does and will stabilize our utility rates since rates would jump dramatically if the utility suddenly and unexpectedly needed to replace an expensive asset. Middleburg implemented these changes gradually over several years in our utility rate model and updates it annually. Abandoning this model now to pursue lower rates would (again) put the system at risk of declining service, wild rate fluctuations or failure; all definitions of irresponsible government.
The model bodes well for the utility’s future and for stable bills that principally rise at about the rate of inflation each year. Middleburg also now has long overdue plans to replace old water lines in Ridgeview.
My current council term expires June 30, 2018. Due to my experience, especially compared to others, I am considering entering the mayoral race, rather than simply running for another term on council. I will have more to say later, so watch this space.
That is my opinion – what do you think? I welcome all comments, suggestions, and questions!