Effingham Daily News, Effingham, IL

March 1, 2014

Effingham city officials considering raising water rates

Wholesale users on the line

Tony Huffman
Effingham Daily News

EFFINGHAM — Effingham area water districts will likely see a hike in their wholesale water rates —  a hike that will possibly have a ripple effect for Effingham City residents as well.

Currently, Effingham not only provides water to city residents, but also provides wholesale water to outlying areas, including Lake Sarah Water Cooperative, the Village of Heartville, Snake Trail residents, EJ Water Cooperative and the Village of Teutopolis. A variety of factors contribute to the possible increase, said Director of Public Works Steve Miller. Several decades-old water agreements are expiring for various surrounding water districts, many of which have incurred additional costs with infrastructure, employees and distribution of water.

“The increase comes from the fact that our rates have been held down for years,” said Miller. “Because of that, we haven’t generated adequate funds for reserves and cash flow backup.”

The Village of Teutopolis has been considering its options for wholesale water purchases, and has sought running a water line to Newton. While that possibility is still in the works, the city council is set to approve a one-year agreement with the village to give it more time to decide its future water purchases.

“They (the city of Effingham) are working hard to put forth a good-faith effort on this, but depending on how quickly they get it done, we might be too far in another direction,” said Village of Teutopolis Mayor Greg Hess of the village’s long-term plans. “Before this, Newton offered us a cheaper rate, along with cheaper rate increases for the next 40 years.”

The new rate also would raise water bills for Lake Sara Water Cooperative customers.

“We had a 40-year water contract with the city that is expiring,” said Bob Kennedy, Lake Sara Water Cooperative Board member. “We are trying to negotiate the best rate possible, but Lake Sara customers will definitely see an increase on their bill.”

Kennedy said he prefers not to speculate as to how much the increase might be until negotiations end. It may differ from city of Effingham residents, because the co-op purchases water from the city at a wholesale rate and resells it to lake residents.

Kennedy said while the co-op prefers to purchase water from the city, it is looking to get the best deal possible for Lake Sara consumers.

On the other side of the county, Snake Trail Water Association is similarly waiting to decide its future water source. Although the Snake Trail area — between Teutopolis and Effingham — has only 48 residential customers, the formation of a water association is due to its location. Having talked to both the Village of Teutopolis and city of Effingham about possible water purchases in the future, the association is waiting for a final negotiated water rate before making a decision. Customers in that area, though, will likely see an increase as well.

“We had run for about 30 years and never raised our rates,” said Snake Trail Water Association Secretary Treasurer Bob Weissing. “We operated at a loss for the last two years. We have to raise our rates, but Effingham’s decision effects by how much we do that.”

Heartville plans to continue service with the city of Effingham.

“We will probably go along with whatever the city of Effingham does,” said Rich Raber, chairman of the Heartville Public Water District. “They have always treated us extremely well.”

According to Miller, a water study the city had done determined an appropriate increase for the city’s financial health, while considering the raise to the customer. The city is keeping in mind rates could change for city residents if area consumers go another direction, he added.

“The city rates could go up if the other water districts leave us,” he said.

Although Miller admits rate increases are never popular, he said the rate being considered is “reasonable considering the circumstances.”

“I believe the rates have been negotiated in good faith,” he said. “We have spent a lot of time to get to this point.”

Effingham City Council is expected to discuss the proposed rate increases Tuesday.

Tony Huffman can be reached at 217-347-7151 ext. 138 or tony.huffman@effinghamdailynews.com or on Twitter @ednthuffman