Rate increases considered

Orangeburg City Council gave first reading last week to DPU’s budget but did not decide what to do about the department’s rates.

Instead, council will spend more time looking at the options. Council also wants to study how the proposed new rates will compare to other utilities around the state.

Councilman Richard Stroman abstained from the first reading of the budget.

DPU Manager Warren Harley presented Orangeburg City Council with four rate options. Three include a rate increase.

“We propose a rate increase that would support and continue our capital improvement plan,” Harley said.

The proposed rate options:

• Option 1: Increase water and wastewater rates only.

The proposal would generate $2.9 million for the utility.

• Option 2: Across-the-board increases on water, wastewater, electricity and natural gas. The option would generate $7 million for the utility.

“I know council may grow weary of the alternating back and forth on the increases,” Harley said. “Option 2 was an effort to provide council and the customers of the city a break because if we did option two, we wouldn’t have to revisit this for another several years. We wouldn’t need to bring it back up until around 2028.”

“If you do it upfront, it is a little cheaper than spreading it out over time,” Harley said.

Under option 2, inside city residents would see a 7.1 percent increase, or $18.46 on average on their total bill

Outside city residents under this option would see a 9.7 percent increase, or $29.22 a month.

• Option 3: This option would be a hybrid of option 1 and option 2, where the water and wastewater rate increase in option 2 would be lowered and replaced with the option 1 water and wastewater rate increase.

• Option 4: Leave rates the same.

Councilwoman Sandra Knotts asked Harley how regulations impact the utility and its customers. Harley said in general regulations cause the utility’s costs to go up. The increases are either passed onto the customer or absorbed by the utility.

“If you look at the current year’s budget, the water and wastewater rates are not covering the cost that we see,” Harley said. “We are losing money.”

Stroman noted that it is not uncommon in business to make money on some services and lose money on others.

“I just can’t go along with a rate increase right now,” Stroman said. “I am sorry. People are having a hard time paying the bill now. Maybe another year we will look at.”

Councilman Dr. Kalu Kalu said the most viable option was option 2.

“We have to bear in mind this is just the first reading that we are undertaking,” he said. “We need to pass first reading and then take the time to absorb the numbers within ourselves to see clearly where we are coming from. Whether we want to increase the rate or not. This is not the time for us to increase or not to increase. This is a time to analyze.”

Mayor Michael Butler said, “We just can’t hear something and say, ‘rate increase’ and just shut it down. We do have to analyze it and see what the numbers really look like.”

“I don’t like to hear rate increases, but we also have to look at the fact that we are custodians over DPU and the progress of DPU,” Butler said. “We have to look at the fact that you all have to move that company.”

“When we look at the budget, we look at the budget for the citizens and we look at the budget for the company which we are the board of directors for,” Butler said.

Councilman Jerry Hannah said doing nothing is not an option as the more rate increases are delayed, the greater likelihood that future rate increases will have to be greater to offset those years when an increase did not occur.

“That can can’t continue to get kicked down the road,” Hannah said.

Councilwoman Annette Dees Grevious asked how DPU’s rates compare to other providers.

Harley said if approved, the rate increases would put the city in front of Rock Hill but still less expensive than Greenville, Columbia, Aiken, Sumter, Lexington, Charleston, Camden and Dorchester County.

Harley said the budget does not include an increase in positions or a cost-of-living increase. It does include performance-based merit pay for employees.

The driver of expenses are an increase in system repairs, inflation and state mandates for the state’s retirement system, he said.

The utility proposes spending about $44 million for capital projects.

“The electric division and the water division will see the lion’s share of that money,” Harley said.

He said the water department will spend about $34.2 million on projects and the electric department about $12.4 million.

Harley said the budget also calls for the transfer of $6.1 million to the city, which is unchanged from the current fiscal year. That would leave the utility with a net profit at the end of the year of $14.1 million.

In addition to giving first reading to DPU’s 2024-2025 fiscal year budget, council gave unanimous first reading to changes to the 2023-2024 DPU budget.

“Over the year our numbers change,” Harley said.

The utility’s revenues exceeded its expenses for the current fiscal year by $14.5 million, though the numbers could change before third and final reading.

After a $6.1 million transfer from the utility to the city’s general fund budget, the utility will see a profit of about $8.4 million for the current fiscal year.