Percentage of losses much higher than average rate

By Greg Ellison

(Nov. 4, 2021) Berlin officials received the final results of a water fund rate study on Monday, and confirmed what they suspected: the town’s water and sewer systems need updated meters to capture lost revenues.

Jean Holloway, from Southeast Rural Community Assistance Project Inc. (SERCAP) in Delaware and eastern Maryland, presented the final report for a study initiated over two years ago.

Holloway last presented findings to the mayor and Town Council in December 2020, and once again highlighted a large variance between gallons pumped and gallons billed.

Holloway said in 2020 Berlin produced and treated, but received no revenue, for 42.6 million gallons of water.

The “non-revenue” water accounted for 25 percent of production, which equates to more than $200,000 at a rate of $4.80 per 1,000 gallons.

Holloway said a “non-revenue” figure of 10 percent would be ideal, with 15 percent deemed acceptable.

While acknowledging that other factors may account for a percentage of losses, Holloway said the primary cause is insufficient metering.

Holloway recommended replacing 200 water meters that are not reading properly or under-registering to ensure accurate billing.

“The current tiered-base charge used is because they could not come up with a uniform rate based on the type of metering you have,” she said.

Holloway said meters over a decade old are often not capable of registering until usage hits 1,000 gallons and commonly result in lost revenues.

Cost savings derived from eliminating manual meter checks would likely cover the upgrade costs within the first year, Holloway said.

Rate structures were also highlighted by Holloway, who said even with meter replacements, both the town’s water and sewer systems would continue to operate at a loss.

“I’m not making an actual rate recommendation tonight,” she said. “I’m making a recommendation that you change the structure.”

Holloway said present water rate structures are inequitable, with users paying more or less than their actual share.

“From what I’ve seen of your numbers, your lower end users are overpaying and your higher end users are underpaying in terms of equitability,” she said.

Holloway also recommended instituting interim rate measures for the remainder of FY21-22 to start accruing funding in capital reserves for infrastructure needs.

“Start with interim measures to build up the capital reserves and you restructure the rates as soon as you can get meters in,” she said.

Councilman Jack Orris said the process would take years.

“This is a multi-pronged approach to a situation that’s been going on for decades,” he said.

Holloway concurred, saying, “It took more than a year to get here, so it will probably take more than a year to get out of here,” she said. “Your staff is probably the main reason the system has lasted this long.”