25LINKBUDGET(FULL) - Flipbook - Page 69
City of Plymouth 2024 / 2024 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 on $205,000 of outstanding bonds, 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 establishing rates that not only keep pace
with the cost increases passed on by Detroit and Wayne County (now GLWA) but also allow
for the accumulation of reserves. These reserves serve to offset unforeseen expenditures and
provide funding for capital improvements to infrastructure, particularly in connection with the
City’s street reconstruction program.
The fiscal year-end cash reserves have shown significant growth, increasing from $63,593 on
June 30, 2000, to $1,778,628 on June 30, 2023. During the current 2023/24 fiscal year, water
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