Smithfield may raise water, sewer rates this year
Published 8:03 pm Thursday, January 30, 2025
- File photo
An engineering consultant has recommended Smithfield raise its water and sewer rates starting July 1.
Town water customers now pay $7 per 1,000 gallons plus a flat $11.47 debt service fee tied to the town’s $4.1 million reverse osmosis water treatment plant that began operating in 2011. The former gets paid into the water fund while the latter gets paid into a separate debt service fund.
The town’s sewer rate, currently at $3.99 per 1,000 gallons and billed based on water use, goes into a separate sewer fund.
The two “enterprise funds,” which are supposed to be self-sustaining, took in just under $3.4 million in operating revenues last year but paid out $3.5 million in expenses, resulting in a net loss of $117,463 as of June 30, according to a recent audit of the town’s 2023-24 finances.
Blacksburg-based TRC, which in 2022 acquired the town’s former consultant, Draper Aden Associates, has projected that the annual deficit could rise to between $250,000 and $500,000 by 2029 if the town doesn’t raise its rates.
“The goal is to cover that deficit with rates,” said Sheryl Stephens, project manager of the utilities division of TRC, during a presentation at the Town Council’s Jan. 27 committee meetings.
Stephens recommended the town leave the $11.47 debt service fee as is but increase the water rate to $8.50 per 1,000 gallons on July 1, followed by another increase to $8.75 by the same date in 2026, $9 by 2027 and $9.50 by 2028.
Those rates would generate the minimum needed to break even based on an estimated 73 new water connections per year from residential development and expected annual increases in the cost of operating the reverse osmosis plant.
The plant’s treatment process discharges wastewater into the sewer system, which is then treated by the regional Hampton Roads Sanitation District. The treatment fee HRSD charges the town is expected to increase 5.5% in fiscal year 2025-26, another 9.9% in 2026-27 and 5% each year after, Stephens said. The recommended water rate increases are also intended to account for an expected 10% increase in the costs of chemicals used at the plant.
Town Manager Michael Stallings had last year cited the rising cost of chemicals and equipment at the plant as the driving factor behind his recommendation to increase the then-$6.75 per 1,000 gallon water rate to the current $7.
Stallings said the town is looking at ways to reduce the quarter-million dollars it’s costing annually to discharge the plant’s wastewater to HRSD, such as treating the wastewater in-house to a high enough quality that state and federal environmental laws would allow it to be discharged into Cypress Creek. Such a process is being used in the Netherlands but so far hasn’t made its way to the United States, he said.
“We are evaluating whether it is financially feasible to try to implement that here,” Stallings said.
The current $7 water rate, plus the $11.47 flat debt service surcharge, results in bimonthly water charges ranging from $53.47 to $81.47 based on a typical 6,000 to 10,000 gallons used. Based on that usage and the town’s current $3.99 sewer rate, water customers typically pay an additional $108.99 to $169.24 for sewer via a combined bimonthly water and sewer bill to HRSD’s Hampton Roads Utility Billing Service.
The proposed water rate increases would translate to an additional $9 to $15 per billing period starting July 1. By the same date in 2028 the average bimonthly water charge would range from $68.47 to $106.47.
That’s still lower than what Isle of Wight County water customers pay. Last year, the county hiked its rate roughly 5% from $12.35 per 1,000 gallons to $12.96. A comparison of Hampton Roads localities’ water billing included with Stephens’ proposal shows Isle of Wight residents were already paying $107 to just over $156 bimonthly for water in 2023 based on the same 6,000 to 10,000 gallon usage. Isle of Wight’s current $12.96 rate is the third highest, after Suffolk and Southampton County, in the South Hampton Roads region.
The town’s sewer rate, under Stephens’ proposal, would rise to $6 per 1,000 gallons starting July 1 and remain at that rate through at least June 30, 2029. Based on that rate, town residents who use 6,000 to 10,000 gallons would pay between $116.49 and $181.73 bimonthly for sewer service.
That’s slightly higher than the $108 to just over $180 range Isle of Wight customers were paying for sewer service as of 2023, according to a comparison of sewer rates included with Stephens’ proposal.
“Historically we don’t do or have not done routine rate increases to keep up with the cost of everything we’re doing and so unfortunately when we do these they wind up being sizable increases because we don’t do them routinely,” Stallings said.