Rate Increase

Why Are Sewer Rates Rising
Posted on 02/26/2024

The 2024 proposed budget for the Hatfield Township Municipal Authority proposes a 4% increase in sewer rates. 

Why are sewer rates rising?

There is no single simple answer to this question, but there are a number of reasons.

The first reason is continued increased cost of equipment, chemicals and utilities.  Until the last several years, it was safe to assume that these particular costs would rise similar to the standard inflation index, which had been relatively low for quite some time.  Then inflation started to increase, but unfortunately the costs of equipment, chemicals and utilities rose much more than inflation.  35% to 50% increases were not uncommon in a short period of time.  In some cases, prices for replacement equipment increased over 50%.  And from past experience, what we’ve learned is that once prices go up, they don’t usually go back down, at least not to previous levels.

By percentage, the largest cost to operate the Township’s Wastewater Treatment System, which includes keeping the Treatment Plant itself running and the collection system flowing, is salaries and benefits.  The next largest cost is utilities such as electric and natural gas, but close behind these comes maintenance, repairs and minor replacement parts, and then comes chemical costs.  These account for almost 70% of the total day to day operations costs, which are currently budgeted at approximately $8.7 million per year.  Increases to salaries and benefits have fortunately remained controllable, but the same cannot be said for equipment, chemicals and utilities.  And we cannot cut back on these without jeopardizing the proper treatment of the wastewater we receive, because this would lead to violations of our State and Federal Environmental Permits.

A second imposing reason that costs will unavoidably continue to increase for Wastewater Treatment Plants is as basic as Father Time.  In 1972 Congress passed the Clean Water Act.  This led to significant expenditures to upgrade existing Waste Water Plants, as well as the construction of new ones, all across the nation.  This includes Hatfield Township’s facility.  But during that period of time, there was Federal and State funding available to communities.  In some cases, Federal Grants for construction were 75% of costs, and States would contribute an additional 12.5%.  Then in the 1980’s and 1990’s, once the Treatment Plants were operational, States like PA began funding programs to help pay for the day-to-day operations of Plants, promising 2% per year for 50 years of any further eligible construction costs needed to continue expanding the Treatment Plant as communities continued to grow.   But this program was eliminated by the Legislature in 2013.

Then over the years many of the newer sewer lines throughout the system were paid for by developers, and in other cases by assessments to the property owners along whose property the sewer lines were constructed.  Tapping fees for new construction funded many improvements, but the hard truth is that Hatfield Township does not have the open space for the large developments of the type previously built throughout the Township that provided those tapping fees. 

Many of the original sewer lines and homeowner’s connections to those lines continue to deteriorate as they age, causing extreme amounts of ground water to enter the pipes.  Excessive ground water overburdens the sewer lines and the Treatment Plant into which it flows.  In some extreme cases the excessive groundwater, referred to as Inflow and Infiltration (I/I) can cause sanitary sewer overflows from manholes.  Over the past 10 to 15 years, we have made significant progress in reducing I/I, enlarging the main sewer lines, and constructing storage tanks to address excessive flow.  But the problem continues, and will continue forever as the lines become older.  The best we can do is to continue to decrease the problem, not eliminate it.

But now for the most part, the days of readily available government and developer funding has dried up or has been eliminated. However, most of the Treatment Plants, including HTMA’s, are now 50 years old, and must continue operating, but as equipment wears out it must be replaced at costs now borne by the local rate payers.  Not only must the Treatment Plants continue operating, but they must continue operating better, because Federal and State regulations continue to become tougher and tougher every year, and the costs for advanced treatment processes to meet these new regulations grows exponentially to the smaller benefit achieved.  In other words, as an example, it might cost $1 million to remove 95% of a particular pollutant from the wastewater, but the remaining 5% could cost $5 million more to remove.  Adding to this is that new and more severe regulations are being established for pollutants only recently discovered, such as PFAS.  These are known as ‘forever chemicals” and will soon result in extreme new requirements being placed not only on drinking water, but also on Wastewater Treatment Plants like ours, which will require additional significant costs to meet.  Additionally, PA DEP is currently in the process of passing a new regulation for copper in wastewater that will cut HTMA’s limit by a factor of 6x.  HTMA will not be able to meet this limit without the use of new and more expensive chemical treatment, or possibly even expensive construction of advanced treatment.  By the way, the majority of copper comes from homeowner water pipes that HTMA has no control over.

You have undoubtedly seen numerous news media reports in this area of potential sewer rate increases other nearby Wastewater entities are dealing with.  One neighboring Township is raising their rate $75 per year to $482.  Another one has approved a rate increase from the current $450 per year to $590 per year.  Regardless of whether it does or does not involve the issue of privatization, the fact remains that the infrastructure of all of these facilities that got their start in the 1970s is wearing out.  And in many cases, when 50-year-old equipment wears out, we can’t just buy new parts to keep it functional because nobody makes the replacement parts anymore, or the manufacturer of the original equipment is not in business anymore. So, we have to buy entirely new equipment and have it retrofitted into the Plant. 

Hatfield Township has had one of the lowest base sewer rates in the region, currently at $390 per year after a rate increase in 2023, which is commendable due to the fact that it has to meet very stringent environmental criteria.  This is because the effluent from our Plant makes up over 90% of the dry weather flow of the Neshaminy creek below our outfall.  Effluent limits are based on dry weather flow, so the lower the flow of the receiving stream (Neshaminy Creek) the more stringent the effluent requirements become.  And the more stringent the effluent requirements, the higher the operational costs.

Our plan for 2024 is to present a rate increase of 4%.   That is $1.30 per month.  In 2023 we had a higher rate increase because we had to play catch-up.  Now we need to try to stay ahead to meet the costs we know are coming.  One of our largest costs in many years is fast approaching.  The electrical grid in our Waste Water Treatment Plant is made up of components 40 to 50 years old, and has reached its useful life.  Failure of this equipment which includes numerous high voltage and medium voltage transformers, switchgear and breakers, transfer switches and much more could be catastrophic.  Delivery of this type of equipment, even after a year of design and public bidding, will itself take one to two years.  Preliminary estimates put this project at $15 million.  This is one of the most critical projects we’ve had to face in many years, but it is just one example of what we have to plan for now so that the funding is there when the bills start coming in.  If we don’t, we will have to borrow the money, yet still raise rates to pay back the loan with interest.  Our last loan was in 1992 and since then we have been able to pay for close to $20 million in capital improvements from a construction reserve fund kept solvent by timely and appropriate rate increases.  But the amount of funding we have in construction reserve is nowhere near the total costs of our upcoming essential projects.

We are diligently applying for both Federal and State Grants for our large projects.  We have met with our local State Senator and Representative to garner their support.  We have also received letters of support from US Representative Brian Fitzpatrick’s office for our Grant Applications.  But regardless of whether or not we receive any Grant money, our projects must continue, and we cannot hope for costs to decrease and significant Grants to be provided.

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