26BUDGET(FULL-LINKED) - Flipbook - Page 71
City of Plymouth 2025 / 2026 Budget
Water & Sewer Rate Determination
The Great Lakes Water Authority (GLWA), formerly known as the Detroit Water and Sewer
Department (DWSD), conducts an annual review and adjustment of its rates for all services
early each year, with the changes taking effect at the beginning of the City's fiscal year on the
first of July. In the 2014/15 fiscal year, DWSD initiated a new rate structure proposal aimed at
simplifying and stabilizing future customer rates. This new structure, based on average
historical costs, was originally intended to remain constant for a three-year period until fiscal
year 2016/17. However, due to the significant shift in rate structuring and the impact of the
Detroit bankruptcy proceedings on DWSD, the feasibility of maintaining fixed rates for three
years was already in doubt.
The rates that became effective on July 1, 2014, resulted in a 5.3% increase for water charges
and a 0.88% increase for sewer charges. However, over the following two years, sales
volumes from GLWA experienced a notable decline for various reasons, including weather
conditions, customer response to rate hikes, and increased ecological awareness.
In response to reduced consumption and the lack of stabilizing funding within the system,
further adjustments to the financing system have been implemented. These adjustments
include a 20% shift in revenues from the commodity-based charge system (based on water
and sewer consumption rates) to the fixed-cost system, along with the establishment of overall
rate goals aiming to generate 4% increases in revenue requirements.
Following the rate adjustment, the City of Plymouth experienced a significant 78% increase
in fixed monthly fees, while the commodity rate decreased by 23%. As a result, our total fixed
charges now constitute 60% of the total charges, with the commodity rate comprising the
remaining 40%. Initially, the GLWA aimed to transition gradually to a 100% fixed-rate
structure to enhance their revenue estimates. However, there has been no indication of this
transition occurring in the immediate future.
The annual cost to the City for water and wastewater removal services from GLWA amounts
to approximately $2.9 million, representing about 59% of the total Water and Sewer Fund
budget of $5 million. The remaining portion of the water and sewer budget is allocated to
various expenses, including local staffing for maintenance of services and mains within the
City, debt service for the Rouge Valley State Revolving Fund loan, funding of capital
infrastructure projects, the purchase of an additional 13 cubic feet of sewer capacity from
WTUA (Western Townships Utilities Authority), and the maintenance of essential cash
reserves due to the capital-intensive nature of these services.
In recent years, the City Commission has prioritized the establishment of utility rates that not
only keep pace with cost increases passed on by the Great Lakes Water Authority (GLWA)
but also support the strategic accumulation of reserves. These reserves are essential for
offsetting unforeseen expenditures and for funding capital improvements to the City’s
infrastructure, particularly projects tied to the ongoing street reconstruction program.
In the current 2024/25 fiscal year, water and sewer operations will transfer $870,000 to the
Water and Sewer Capital Improvement Fund. This transfer will support the repair and
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