The Board of Water Commissioners have set the FY2016 water rates. The new rate schedule is available online and includes an 18% increase in the water rate.
Two sources of information are used to determine the water rates. The first is the Water Department's FY2016 budget that was approved by Town Meeting in May 2015. The second part is how much water we expect to sell in the coming year. The sales forecast is a conservative estimate because any revenue shortfalls must be covered by tax revenue. We look at recent production data and develop an estimate of the minimum amount of water that will be consumed during the fiscal year and adjust the rates to generate the revenue needed to fund the budget.
This year's rate increase is largely driven by the increase in the Water Department's reserve fund. This part of the budget was increased in preparation for capital projects and associated long-term bond payments. Rather than having variable and sometimes extremely large rate increases as the projects progress, the Water Commissioners have elected to have smaller, regular rate increases to smooth out the effects of the projects and make the increases more predictable. It is anticipated that water rates will increase by 20% each year over the next several years.