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New Kensington to raise sewage rates by 9%

| Sunday, Nov. 4, 2012, 12:02 a.m.

The Municipal Sanitary Authority of New Kensington will increase rates by 9 percent next year, bringing the rate to about double what it was a decade ago.

Authority Manager Dan “Skip” Rowe did not quibble with one estimate that rates have gone up for about 15 consecutive years for New Kensington residents.

“That's about right,” he said. “The main reason behind that is we've put about $38 million worth of debt into the plant.”

Rowe said the sewage treatment system, which serves about 13,000 customers in Arnold, Lower Burrell and a small portion of Plum in addition to New Kensington, has been handed several consent decrees from the federal Environmental Protection Agency since the 1990s, requiring upgrades to meet modern treatment standards.

Improvements have included the replacement of pumping stations, aeration equipment, generators, improved digesters and repairs to aging sewage lines.

Rowe said authority officials have tried to phase in small rate increases each year to cover the debt service payments. They believe that method is more manageable to customers than hitting them with big rate hikes every few years.

“We've raised the rates so much every year, anywhere from 5 to 9 percent, and made it a nice, even slope,” Rowe said. “It's a nuisance, but it's not a 50 percent increase.”

Next year's hike should be the last needed to cover debt payments, which amount to about $3 million per year, or about half of the authority's $6.2 million budget, Rowe said.

“Barring any unforeseen circumstances, we should be OK for awhile,” Rowe said.

But that's probably only a temporary reprieve. The authority is in the midst of another decree from the EPA to limit the amount of minimally treated sewage that overflows into the Allegheny River during wet weather.

Some improvements have been made to the plant, but more will be required. The plant's capacity is about 6 million gallons of sewage per day, but it can experience a flow of about 15 million gallons per day in wet weather.

Rowe said the entire system will be monitored in the upcoming years and a plan is expected to be created by 2014 that could call for tripling plant capacity — which will have a considerable cost.

“The only way to pay for it is rates unless you get some magic grant money,” Rowe said.

Rowe estimated it could take 30 years to pay off existing debt, depending on refinancing that often reduces interest rates but extends the length of repayment. Rowe said two recent refinancings have saved the authority nearly $2 million.

The rate hike reflects what the authority's 5,500 New Kensington customers will pay. The other communities set their own rates to cover the bulk cost they are billed by the authority plus whatever expenses they incur to maintain their own sewage lines and equipment.

Arnold Mayor Larry Milito said his council has not set sewage rates for 2013.

Rowe said there were no major cost increases for 2013. He said the authority's 17 employees will receive contractual raises of around 2 percent.

The sanitary authority still is trying to negotiate a deal over a proposed increase to the meter-reading fee assessed by the New Kensington water authority. The water authority wants to increase that fee from 25 cents per reading to $1.50, which would cost the sanitary authority an estimated $32,000 per year.

The increase would negate the savings the sanitary authority realized by having an Oakmont company take over its billing, which previously was handled by the water authority.

Jack Mihok, chairman of the sanitary authority board, said he doubts that the increased fee will affect 2013 rates.

“We already set our rates for next year. We've already done a budget,” Mihok said. “Eventually, yes, everything impacts rates. It might not this year, but over time it does.”

Lower Burrell Mayor Don Kinosz said city officials need to review their budget in light of the meter-reading fee.

The city cut costs to avoid a sewage rate hike, but the fee could undo two months of budget work, Kinosz said.

“It will have an impact, and we'll have to see if we can absorb it or not,” he said. “You can only cut so far.”

Liz Hayes is a staff writer for Trib Total Media. Staff writer Jodi Weigand contributed to this report.

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