Friday, July 28, 2000

Newport water rate may go higher

Leaders hear new projection

By Terry Flynn
The Cincinnati Enquirer

        NEWPORT — New projections for Newport Water Works revenue compiled for the city's finance department indicate a possible residential water rate increase of 31 percent on Jan. 1, city commissioners learned Thursday. During a special meeting called to continue discussion and review of the proposed 2000-2001 city budget, it was disclosed that the rate increase could be well above the original projection of 20 percent presented to commissioners at the Tuesday budget session.

        “The original estimate of increase was based on an average figure of 2.5 million gallons per day purchased by the Northern Kentucky Water District,” Greg Engelman, the city's financial officer, told commissioners.

        But with new figures from a cash flow analysis of the water system, he said the average daily purchase was about 2.1 million gallons. If that figure continued through the remainder of the year, a rate increase of 31 percent would be necessary to maintain the debt service for bonds needed to pay for planned improvements to the system through 2005.

        Water Works director Frank Peluso pointed out that in the last few days the demand from the water district has risen to 5 million gallons per day. If the district continued to buy water from Newport at that volume, the needed rate in crease would be considerably less.

        “There's no way to tell what's going to happen, however,” he said. “We can't predict what will happen with the water system in the coming months. Anything is possible, good or bad.”

        He pointed out that capital improvements proposed for the water system over four years “are bare minimums. We are looking at just what we absolutely need to do. That could also change and we would need more money, depending on what happens to the system.”

        The new water system projections called for an additional 4 percent rate increase in 2003, 3 percent in 2004 and 5 percent in 2005.

        Mayor Tom Guidugli said city officials would continue to monitor the water system's sales and revenues over the next few months before making any decision on the amount of the rate increase.

        City Manager Phil Ciafardini told commissioners at Tuesday's meeting that before any rate increases were implemented he recommended the city once again examine the sale of the water system to the water district. That possibility was not discussed Thursday night.

        The city placed a water system sale proposal on the November ballot in 1999, but Newport voters turned it down.


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