FY 2017 Budget Highlights
ORDINANCE NO. 12-29-624
THE EFFECTIVE DATE OF THIS ORDINANCE IS DECEMBER 4, 2012
Re: Revisions to the Water and Sewer System User Rates Charged by
the Division of Utilities and Solid Waste Management
BACKGROUND
In late 1999, the Frederick County Board of County Commissioners (BOCC) approved a comprehensive analysis
of the County's costs to provide water and sewer services and to develop appropriate water and sewer rates to
adequately recover the costs associated with the provision of these services. After several workshops and public
hearings the BOCC adopted Ordinance No. 01-05-279, which became effective in May 2001. The rates were set
for a five (5) year period, with small incremental increases each year through FY 2006.
In 2008, the rate model was reviewed for rate adequacy. At that time, the BOCC determined that a water rate
increase could be deferred, based on the notification to the City of Frederick that the 1.5 MGD (max day capacity)
referenced in the Potomac River Water Supply Agreement (PRWSA), was now available. It was anticipated that
the City would begin purchasing water under the PRWSA and that increased revenue may offset the need to
increase user rates to the existing customers. Again in 2010, the Division of Utilities and Solid Waste Management
(DUSWM) indicated that a rate increase may be necessary unless the City of Frederick started purchasing water
from the County.
As of 2012, the sale of water to the City has not occurred and the availability fees charged to the City for their
water supply fall short of covering the County's proportionate costs to operate and maintain the much expanded
water system infrastructure. Operating losses over the last four years totaled $15.6 million, which was covered
by the Water and Sewer reserves. Growth in the customer base, good management of the utility and the use of
reserves allowed the DUSWM to delay additional rate increases. However, utilizing the water and sewer
enterprise reserves to fund these essential services is not sustainable.
The County's current water and sewer rate structure, which relies on an availability fee, or Ready to Serve (RTS)
charge, and water and sewer volume charges, has been in place for more than decade and have not been increased
since 2006. Water and sewer volume charges provide most of the Water and Sewer Enterprise Fund's revenues.
In 2012, Municipal and Financial Services Group (MFSG) was hired to review and update the County's water and
sewer rate model. MFSG completed the review and determined that the sewer rates currently in place require an
overall 13.6% increase to ensure adequate revenues are generated to cover the sewerage system costs. MFSG also
determined that, without committed sale of water to the City, the County will need an overall increase in water
volume rates of approximately 59.2% in FY 2014 to discontinue the use of operating reserves that subsidize the
annual operation of the Water and Sewer Enterprise Fund.
On October 25, 2012, the DUSWM presented the above-referenced information and options to the BOCC for
water and sewer rate changes. The BOCC voted to move forward to public hearing with a rate change option that
revises water and sewer rates gradually over a 5-year period.
Therefore, pursuant to the authority contained in Chapter 2-13 of the Code of Public Local Laws of Frederick
County, the Board of County Commissioners ("Board") is adopting revised water and sewer system user rates
(service charges) to bring them in line with the costs of providing water and sewer services to the users.View entire presentation