Groton — The Groton Utilities Commission has approved a proposed three-year sewer rate schedule that would increase rates on average by about 3% a year.

Mark Beauchamp, president of Utility Financial Solutions LLC, presented the rationale for the rate increases at a public hearing on Monday evening. Beauchamp said in some cases rates may increase by a little more than 3%, but on average, it's about a 3% increase for the next three years.

Under the proposed rate schedule, a user with a 5/8-inch meter size, the most common residential type, who currently pays $9.40 as a monthly service charge, would pay a monthly service charge of $10.15 as of Feb. 1, 2022; $10.90 as of Feb. 1, 2023; and $11.65 as of Feb. 1, 2024.

The monthly consumption charge, which currently is $0.054 per cubic square foot recorded on the meter, would be $0.0547 per cubic square foot as of Feb. 1, 2022; $0.0555 per cubic square foot as of Feb 1. 2023; and $0.0563 per cubic square foot as of Feb. 1, 2024.

Beauchamp said the rate increases mean that an average residential user will pay about $13 more per year — or about the cost of a pizza, City Mayor and Groton Utilities Commission Chairman Keith Hedrick said.

Beauchamp said a cost-of-service study looked at revenue and costs to design rates. Ten-year financial projections take into account three financial targets: the funds needed to pay back debt incurred for the capital improvement plans, the cash needed so the utility can pay its bills in a timely fashion, and targeted operating income, which identifies how much money is needed each year to replace infrastructure. 

The projected capital improvement plans are $1.5 million per year, according to the presentation.

Beauchamp explained that there is variability in the projections because, for example, the capital improvement plan could be more than projected, or grant funding could be received.

"There's several unknowns. However, what we're trying to do is to prevent the need for large future rate adjustments," Beauchamp said. "Smaller adjustments today tend to minimize the large rate adjustments that may occur in the future if we don't do the proper adjustments today to maintain these targets."

He said customers tend to prefer smaller periodic rate adjustments, rather than having the utility go seven years without a rate adjustment and then all of a sudden have a larger adjustment of 10%, 20% or even 30% that customers were not anticipating. The goal is to plan for smaller periodic rate adjustments that keep the utility financially stable and minimize the rate impacts on customers.

No one from the public spoke at Monday’s hearing. The rate schedule will next go before the City Council for approval, with a first reading scheduled for Nov. 15 and the second reading slated for next month, Hedrick said.

k.drelich@theday.com