WHY ARE SEWER RATES RISING
The 2024 proposed budget for the Hatfield Township Municipal Authority showed a 4% increase in sewer rates.
HTMA is proposing a 5% increase for 2025.
WHY ARE SEWER RATES RISING?
There is no single simple answer to this question, because 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. Our newest electricity contract has increased our electric costs by 13%, or about $47,000 per year beginning in 2025. And because this contract only includes 6 months of the massive capacity increases levied by PJM, the following year’s costs are expected to increase as much again.
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 chemical costs. These account for almost 70% of the total day to day operations costs, which are currently budgeted at approximately $8.8 million per year. Increases to salaries and benefits have fortunately remained predictable and 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 which after its upgrade was one of the most advanced wastewater facilities in the Nation. But during that period of time, there was Federal and State funding available to communities. In some cases, Federal Grants for construction were 50% to 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 reimburse waste water facilities for additional treatment equipment, 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 in PA, this program was eliminated by the Legislature in 2013.
Over the years, most 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 no longer has the open space for the large developments of the type previously built throughout the Township that once 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 sewer lines become older. The best we can do is to continue to decrease the problem, not eliminate it.
But now, the days of readily available government and developer funding has dried up or has been significantly reduced. 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 that must now be 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, which by now you have probably heard about in the news. 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 facilities like ours. This will require additional significant costs to meet. At the same time 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 which 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 just raised their rate $75 per year to $482. Another one has increased its’ rate from $450 per year to $590 per year. A third entity whose rates are already higher than Hatfield’s will be raising their rates 10% per year for the next 3 years, then 8% in year 4. 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 now 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 one of the lowest base residential sewer rates in the region, currently at $405.60 per year after a rate increase in 2024, 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 increase for 2024 was 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 beginning in 2025. 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 even the underground wire in the Plant 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 $10 to $12 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 by timely and appropriate rate increases, while still maintaining the lowest sewer rates in the area. But the amount of funding we have allocated in construction reserve is nowhere near the total costs of our upcoming essential projects. And the costs for these projects is an addition to the previously mentioned $8.8 million in annual operations costs.
We are diligently applying for both Federal and State Grants for our large projects. We have met with State Senator Collett and State Representative Malagari to garner their support. We have also received letters of support from US Representative Fitzpatrick’s office, along with US Senators Casey and Fetterman for our Grant Applications. But regardless of whether or not we receive any Grant money, our projects must move forward, and we cannot simply hope for costs to decrease and significant Grants to be provided.
Over the past 2 years we have applied for Grants totaling more than $15 million from several different Federal and State agencies for our electric grid replacement project. To date we have been awarded only $250,000. Although greatly appreciated, it is far from what we need to pay for this project.
We are still waiting to hear from several other Grant agencies, and have one more application to submit. One of the reasons that FEMA used for rejecting our Grant request was that there was not enough citizen outreach or socioeconomic benefit to justify them providing funding for HTMA. So unfortunately, this leaves HTMA in the unfortunate position to raise its rates to pay for these upgrades. This year’s increase will add $1.69 per month to each residential unit sewer bill, or $20.28 per year, and we will still remain the lowest sewer rate in the surrounding area.