Public utility rates

As we report this week, residents in Tower pay $234 a year more for water and sewer than their neighbors in Soudan, yet both are served by the Tower-Breitung Wastewater Board and pay exactly the same rates for the services that the joint powers board provides.
After rate increases in both communities, which took effect Jan. 1, residential water and sewer customers in Tower will pay more than $1,000 in 2022 for the privilege of turning on their tap and flushing their toilets. Over in Soudan, residents will pay just $780. This disparity isn’t a new issue. It’s been this way for years, and yet city officials seem to have preferred not to ask why.
Neither community’s charges are particularly out-of-line when compared to other small municipal systems, but that’s not the point. City officials in Tower, for too long, have been willing to shrug their shoulders and pass off the difference as the result of factors beyond their control.
When asked about the difference for our story, neither city nor township officials could provide an answer. City officials pointed out that Tower uses more water and sewer, and so has to pay more, but that answer doesn’t explain the disparity.
Based on 2021 data obtained by the Timberjay, Tower and Soudan used virtually identical amounts of water. While Tower used considerably more sewage capacity, sewage rates have been quite low in the two communities prior to 2022, which means the TBWWB billed Tower just $4,000 more than Breitung Township for the extra usage. Large commercial and institutional users, like schools, restaurants, and laundromats, should be paying for most of that.
In either case, our report on the subject compares residential customers, and we’ve seen no evidence that suggests residential ratepayers in Tower flush their toilets any more frequently than in Soudan.
Our investigation into this issue found that Breitung Township does a good job of assessing its costs and billing its customers appropriately. Both communities charge customers based on a “water” and a “sewer” line item, and in Breitung, the amount billed on those two lines matches up to within a few hundred dollars of the roughly $114,000 that the TBWWB billed the township in 2021. The extra charges, contained in three other line items that the township assesses customers, to cover the cost of maintaining their own water and sewer infrastructure, again, also match up very well with what the township spends to operate and maintain its infrastructure. When the billings to customers match the costs to the provider, there is transparency and utility customers can be confident they’re being charged the true cost of the service.
There is currently no such clarity in the case of Tower and there hasn’t been for years. The city charges its customers considerably more under their “water” and “sewer” line items than the city pays to TBWWB for those services. In 2021, the TBWWB charged the city $121,448 to provide water and treat sewage. Yet the city charged its customers almost $147,000, or about $25,000 more than that on the water and sewer lines of their bills. On top of that, the city adds in additional line items, charging customers for things like “capital reserve” and “filtration debt,” both of which are already included in the $121,000 that the TBWWB billed to the city last year. Add it all up and the city charged customers approximately $191,000 for services from the TBWWB that cost $121,000. On top of that, the city bills its customers an additional $37,000, for the operations and maintenance of the city’s water and sewer infrastructure.
We’re sure that it is costing the city more than $37,000 a year to maintain its own utilities infrastructure, but how much more isn’t clear because its water and sewer budgeting is unnecessarily complex and unclear.
What we do know is that the city collected $248,227 from its water and sewer customers last year, while paying the TBWWB $121,448. Yet, according to city officials, the city’s utilities barely broke even. If so, that says that Tower spent approximately $127,000, or well over twice the $60,000 Breitung spent, to maintain a water and sewer system that serves almost the same number of customers. City officials need to be asking themselves why that is.
This isn’t a small item. City residents pay a lot for their drinking water and a toilet that flushes. Indeed, many homeowners pay more for these services on an annual basis than they pay in property taxes. City officials owe it to their residents to take a serious look at why these basic services cost so much more in Tower.