Dear Hatfield Township Municipal Authority Customers:
As the Executive Director for the Hatfield Township Municipal Authority for the past 28 years, I have had the opportunity to bring issues to your attention when necessary. At this time, I must report to you that the convergence of a number of factors has now led to an unprecedented situation for HTMA in the form of its sewer rate increase for 2023, beginning April 1.
HTMA is at what could be called a “crossroads”, where the revenue it receives will not meet the expenses it incurs. Until now, growth in the Township and infrequent and moderate sewer rate increases have kept pace with increasing costs, and have provided HTMA with the income needed for its day-to-day operations, as well as for ongoing capital expenditures such as fixing and replacing sewer lines, constructing storage tanks and replacing outdated treatment equipment at the Plant.
But the fact is that the era of significant housing growth in Hatfield Township seems to be waning to the point where HTMA is forced to begin raising sewer rates more often to adequately fund and run the Treatment Plant and the Collection System, in order to meet its obligations to the regulatory agencies and to the environment.
The newest portion of HTMA’s Treatment Plant is 38 years old, other equipment is over 50 years old, and although most of it is still in good shape, HTMA must accept the reality that going forward, without even considering any necessary new equipment for additional treatment which may soon be imposed upon it by more stringent regulatory requirements, more of the existing equipment will need to be replaced, and the cost of those replacements will be more expensive. As an example, HTMA is currently in need of refurbishing its internal electric grid which at the present is expected to cost at least $5 million, and possibly $7 million dollars based on current pricing. As with a current Grant that was recently received for a different project in the Plant currently in the final design stage, HTMA hopes that there will be Grant funds available to offset part of the electric grid cost, but nothing has yet been approved.
This past year was unprecedented for increased costs incurred by HTMA. It is not a matter of “if” a rate increase is needed, but rather how much of an increase is needed. If HTMA does not begin to act now, it is merely kicking the can down the road, and instead of this increase, in short time numerous 25% increases could be needed to catch up.
With this year’s rate increase HTMA will still have among the lowest of sewer rates throughout the region, as you can see by a list of area sewer rates here (under the Rates & Fees tab). HTMA last increased sewer rates in 2018, and prior to that in 2013.
The regulations HTMA must meet continue to get tougher. The cost of electric, the cost of treatment chemicals and the cost of maintenance have exploded. 2022 saw electric costs increase by approximately 36%. Monthly cost of electric that was approximately $35,000 per month has become $45,000 per month, an increase of over $120,000 per year. The cost of the 3 major chemicals needed for treatment have increased an average of 49% over the past two years, an increase of over $105,000 per year. And maintenance costs have increased 31% over the past year, and 53% over the past two years, an increase of over $150,000 each year. And these are just examples.
Annual increases in sewer revenue from new construction have decreased through the years because Hatfield Township is running out of large tracts of developable residential space. The only thing that prevented HTMA from raising rates in 2022 was the expectation of enough added revenue from two current Township developments, and with the assumption of NORMAL cost increases. There are few developments like these on the horizon, and increasing costs have not been normal.
HTMA’s 3-year capital projects plan lists almost $12 million in known capital improvements, capital equipment and capital projects. As with a recent grant received for one of its capital projects, the hope is that there will also be grants available for two or three additional larger capital projects currently in the planning and design phase. Unfortunately, however, grants alone will not maintain a balanced budget, but could delay and lessen the next rate increase.
There are no Federal or State Funds available to assist HTMA in its day-to-day expenses. Our Plant must operate and our collection system function with revenue we receive from its rate payers, and from some additional miscellaneous revenue we receive from trucked-in waste, which has for a variety of reasons decreased over the years. There was no Federal Stimulus money received over the past several years, and there is none going forward.
Nobody wants a rate increase, and hopefully costs will stabilize and maybe decrease over the next several years, so that HTMA will not need to increase sewer rates again until 2025 at the earliest. Until then you can at least be sure that HTMA will continue with its goal, to the best of its ability, to provide the service to the community that its ratepayers and its Commissioners expect, and will continue to meet the ever-tightening regulations imposed upon it by the Federal and State environmental agencies it answers to.
Peter Dorney
Executive Director