We know that no one likes a rate increase. We would all like to pay less for things. We want our customers to understand why the increase was necessary, and address some concerns you may have about how money is used.
Q: Why did you increase the rates?
A: The rates we currently charge are not sufficient to allow us to repay our debts, operate responsibly, and set aside the necessary funds for future improvements and expenses. As our expenses have increased over the years, our rates have not.
Q: Why is the increase so much at one time?
A: Over the years, the cost of necessary things like parts, chemicals, etc. have increased, but our rates were kept the same. This means that our funds to operate have been in steady decline. We cannot answer for why past decision makers did not research rates and implement increases regularly in order to make small increases over time to keep pace with expenses, but we do assure you that by-laws and financial policies are being drafted to ensure that current and future decision-makers regularly and consistently review rates and make small increases as necessary.
Q: Who decides if you can increase the rates, and how is the rate calculated?
A: Because we have borrowed money from USDA, they have the authority to approve rate requests from us. The rate has to be calculated using a certain formula. To keep it simple, the rate we are allowed to charge is based on two things: 1) our status as a non-profit corporation; and 2) a sustainability factor. Because we are a non-profit, state law requires that we not charge more than 33% more than our actual operating cost for a period of three consecutive years. You should know that we have been operating at a loss, not a gain. A sustainability factor is the goal amount above operating cost that USDA encourages utilities to maintain. The current sustainability factor of this increase is projected at 1.15, which means the amount we charge is 1.15% more than what it actually costs us to keep the water flowing and keep our bills paid.
Q: Why did you borrow money from USDA? Couldn't you have done any of those projects without borrowing?
A: Funds were borrowed from USDA because we could not afford to complete those projects without borrowing, and USDA offers the lowest interest on loans. Some of the funding was grant money, so only a portion of the 1.6 million dollars we spent has to be repaid. We are working to establish and maintain depreciation reserves beyond what USDA requires so that we can avoid borrowing money or financing some things in the future, like company trucks and excavation equipment. Previously, depreciation reserves for these type items were not in place, and we're working to change that.
Q: Why did you spend so much? I heard that some of the things you did cost A LOT of money.
A: It's important to remember that these projects were done for two reasons: 1) some of it was just necessary in order to ensure our ability to keep the water flowing; 2) customers asked us to. We know that the quality of the raw water sources we have access to is not what you would like it to be. We all want clear water, and we want it consistently. But producing clear water from a raw water source that contains iron and manganese is no small, and no inexpensive, task. And it's true that these projects cost a lot of money. When we borrow money, we have to abide by State bid laws, and when government money is up for grabs, none of the bids are what most of us would call "reasonable". We are also obligated to accept the lowest bid, even if we aren't comfortable with the contractor. That is totally beyond our control. But when we finance projects without borrowing, we can freely shop for the best price and we can choose the contractor we really think will do the best job, because we aren't using outside financing. That's one reason we're working to make sure that we set aside reserves for work we know will have to be done in the future, like replacing water mains as they age. The fewer things we have to finance, the better it is for everyone.
Q: What about these projects you did? What did we get, and did we really need it?
A: Our projects, funded by a grant / loan combination from USDA, allowed us to do several very necessary things. We installed a new well to replace one of our existing wells, because the raw water quality of that well was much worse than the other one. Poor raw water quality means more treatment expense, and it also means that you were more likely to receive discolored water because of the mineral content of that well. So, we put in a new well at a depth closer to the "good" well we had so that the raw water quality is better and more consistent. Our existing well we were depending on also needs repair, so the new well ensures that we can continue to supply better quality water while those repairs are made.
We also installed a new filter system. This new filter is much more capable of filtering out iron and manganese that naturally occur in the aquifer we have access to. The old filter was both less efficient and too small since the system population has increased significantly since the installation of that filter in 1973. It was also important to replace the old filter because the old filter was not in good condition, and was so old it could not really be repaired. In addition to these issues, we had to use a very expensive chemical treatment to sequester the iron and manganese the filter could not remove to keep your water clear. The "scum" or "oil slick" you sometimes saw on the top of your coffee was dispersed minerals, and you should notice it less over time as the remainder of the buildup of that treatment chemical is flushed from the distribution system. Replacement of the filter was necessary, and was in our customers' best interest.
We installed a new chlorine building, which accomplished several things. First, our old chlorine building was no longer considered compliant by EPA standards, and was damaged last year by straight line winds, so replacement was necessary. This new building also allowed us to install dual chlorination cylinders so that a fresh chlorine cylinder comes on line in case the one in use runs empty while employees are away. This lets us get the maximum use out of a chlorine bottle by not having to take it offline before it's really used up. We also re-routed the chlorination feed, to get chlorination lines out of a building that contains electrical equipment. Chlorine gas is highly corrosive, and the original configuration of the chlorine system was causing undue wear on electrical wires and fuses.
We installed some new water mains in various areas of the system. New water main was run on Merton Bowe Road in order to tie the two ends of existing main together. Previously, the water main on Green Lane was the only way to supply water to customers on the north end of our water system. If anything happened to the main on Green Lane, it meant that all customers beyond that point were out of water until the problem was solved. We also ran new, larger water main in the area of Journeys End Road. This was necessary due to population growth. Originally, Journeys End Road customers were served by a two inch water main. As the area grew in population, the two inch main did not deliver adequate water pressure to residents there. We are also running a new section of water main on LA 2, which will allow us to serve the Bayou Galion Subdivision from a new tie in. This will allow us to eliminate a stretch of main running through a field, and will give us a better way to isolate that area in case we need to make repairs. Currently, if it is necessary to make repairs well away from the subdivision, valves used to turn water off to other areas affect that neighborhood as well.
A new office building was constructed, because USDA could not give us the funds to do those projects unless we had a fully ADA compliant office facility. Because our previous office building had some compliance issues that could not be overcome, we were instructed to re-write our funding request to include a compliant office facility. Without the new office, there would be no new well, no new filter, and no new water mains. Our original request DID NOT include the office building. We're glad to have it, and we hope you find it more comfortable than standing on the porch, but the office building was constructed solely because we had to.
Q: I keep seeing "non-profit" in all of this...what does it really mean?
A: We are a 501 c13 corporation. This means that we do not distribute water for profit. Our designation requires payment of sales tax, and your water payment is not tax deductible. Each customer is considered a part owner of the system, and that's why it's important for you to attend our annual meeting, read the messages on the bottom of your bill, carefully read any papers included with your bill, and listen carefully to automated calls we may send you. The system is ultimately yours; the Board Members and employees are here to take care of it for you.
Q: What about your employees? Are you paying them too much and charging me for it?
A: When it comes to employee pay, employee wages account for roughly 24% of total operating expense. The amount of net payroll in 2016, for all employees combined, was $60,019.63. We have not given raises in the last 5 years, not because we don't think they've earned a raise, but because we simply could not afford it. Full time employees receive 5 days of paid sick time each year, and after two years of employment they receive 10 paid vacation days per year. We do not offer insurance or retirement. Because we do everything we can to keep costs down, we have as few employees as possible. This is both a good thing and a bad thing. It means that we save money by not having a lot of staff, but it means that each employee has a heavy workload. It also means that our employees are rarely able to use their vacation days, because they cannot be absent when repairs must be made, when it is time to read meters, time to generate bills, or when payment traffic is high. You may notice our office being closed more often than it has been in the past, because we have decided that it is not cost-effective to pay someone who can't actually do the work to keep the office open if our secretary has to be away for training or for a day off. We think paying someone to say, "Come back tomorrow" is not the best use of your money or your time. We'll do our best to make sure office closures are printed on your bill or send a you a notification call so that you aren't inconvenienced by an office closure.
Q: What else do you do to save money? Can't you "trim some fat" instead of charging more?
A: We take lots of measures to save money. We keep a strict inventory to make sure that parts are accounted for, and we shop to make sure we're getting the best deal on necessary items. Our secretary's work is reviewed by a bookkeeper every month to make sure all the funds we receive are accounted for, and we also have a CPA do a yearly financial review to further ensure that your money is handled properly. We disconnect customers for nonpayment if the bill isn't paid every month in order to prevent anyone from exceeding what their deposit will cover if they move without telling us. We also do that because we have to collect what we bill; we charge you what it costs us to operate. We have a high reconnection fee to encourage customers to not let their service get disconnected--it's better for you and for us to receive payments on time. We prosecute water theft, and we charge for broken or damaged meters, meter locks, and fixtures. We participate in the Louisiana One Call program, and we send a bill to anyone who digs and breaks our lines because they violated the marks or did not put in a locate request. We do not allow personal use of company equipment, such as company trucks, trailers, or maintenance equipment. We closely monitor employee purchases, and if anything inappropriate is found, the amount is deducted from the employee's pay and their employment may be terminated. Customers asked us to expand our payment options to include credit and debit cards, and we found the least expensive way to do that. We go through PayPal and use an inexpensive tablet computer and PayPal's free card-swiper, because a point of sale machine and the software to connect the payment system to our billing system was going to cost thousands of dollars. We don't spend your money on "frills" like calendars or pens, not because we don't appreciate you, but because we would rather put your money to use making sure that we are providing the best water to you that we can. You might spot an employee washing their vehicle from time to time, and we assure you, they pay for the water they use at a rate higher than your water bill. The current Board of Directors has chosen to lead by example, and voted unanimously to discontinue Board Member compensation. Your Board of Directors serves without receiving any discount on their bill, and they receive no other compensation. The Board and employees are constantly looking for creative ways to solve problems or acquire things we need. Soon, you'll see our field employees in company-issued T-shirts airbrushed with BBIWSI, because we can get the shirts for a great price from the manufacturer, and airbrushing was less expensive than all the screen-printing services we could find. We watch everything from the thermostat settings to how many ink pens we distribute to each employee at a time.
Q: I hear what you're saying, but I'm still angry. What can I do about it?
A: We know you aren't happy about being asked to pay more for water, and we're well aware that from what we're told, many of our customers don't place any value on the water or service we provide. While that is discouraging, the Board Members and staff continue to work to improve water quality and provide services you ask for. One thing you can do is let us help you understand some things you may not be familiar with. Water is not a simple thing to provide. It costs a lot of money, and it takes a lot of effort and some very hard work to keep water flowing to your tap. We will soon have a page on this site to help you become more knowledgeable about things related to your water service. We know from experience that once most people find out what is required of us and what goes into providing your water service, things make more sense and it's easier to understand things you may not like, such as rate increases. You can compare the cost of your water to service to other things you purchase by the gallon. Your water doesn't yet cost a whole penny per gallon. Compared to the price of a gallon of gas, milk, or propane, that's not a high price to pay. You can also become involved. This is a customer-owned, non-profit system. It belongs to you, and our staff and the Board of Directors are here to steward what belongs to you. You can report leaks you may notice on the system, you can report anyone using a flush hydrant or other fixture illegally, and you can attend meetings if you like in order to learn more about how we operate. Each year, we hold an annual meeting specifically for you to attend and ask questions, and each year we struggle to have 10 customers out of 570 active customers actually attend. The meeting is announced through a bill enclosure, in the Bastrop Enterprise, and through an automated call. If you find the meeting time, which is typically 6:00 pm, to be too early in the evening, please let us know. We will be happy to schedule next year's meeting a time more convenient if it means we can actually get customers involved.
Jill's water consumption this month was 3,500 gallons. To figure out how much her bill will be, we need to subtract 2,000 gallons from 3,500, because that falls under the minimum charge. Then, we need to multiply the remaining 1,500 gallons by $0.0085, which gives a result of $12.75. Now, we add $12.75 to the minimum charge of $27.00, and add the $1.00 fee the state charges. That gives a total bill of $40.75.
Because the Residential rate and the Non-Profit rate are structured the same, the example above would apply to this rate as well.
Commercial Rate I
Joe had water consumption of 4,200 gallons this month. To calculate Joe's bill, we need to subtract 2,000 gallons from 4,200, because the minimum charge covers that. Then, we need to multiply the remaining 2,200 gallons by $0.009, which gives a result of $19.80. Now, we add $19.80 to the minimum charge of $45.00, and add the $1.00 fee the state charges. That gives a bill of $65.80, plus any tax rate in effect at the time of billing.
Commercial Rate II
$27.00 minimum charge* for 0 - 2,000 gallons
$8.50 per 1,000 gallons for all consumption above 2,000 gallons ($.0085 cents per gallon)
$27.00 minimum charge* for 0 - 2,000 gallons
$8.50 per 1,000 gallons for all consumption above 2,000 gallons ($.0085 cents per gallon)
Small Commercial Accounts:
$45.00 minimum charge* for 0 -2,000 gallons
$9.00 per 1,000 gallons for all consumption above 2,000 gallons ($.009 cents per gallon)
Large Commercial Accounts:
$100.00 minimum charge* for 0 - 8,000 gallons
$9.00 per 1,000 gallons for all consumption above 8,000 gallons ($.009 cents per gallon)
*NOTE THAT ALL ACCOUNTS ARE STILL SUBJECT TO THE $1.00 PER MONTH CHARGE LEVIED BY THE STATE OF LOUISIANA, AND COMMERCIAL ACCOUNTS MAY ALSO BE SUBJECT TO TAX.