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Water, sewer rates to go up 5.1 percent; Suez plans annual increase for length of 50-year borough lease

By Dan Miller

danmiller@pressandjournal.com

717-944-4628
Posted 12/21/18

A 5.1 percent rate increase will be added to Middletown water and sewer bills as of Jan. 1, according to Suez, the private company that operates the borough’s water and sewer systems.

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Water, sewer rates to go up 5.1 percent; Suez plans annual increase for length of 50-year borough lease

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A 5.1 percent rate increase will be added to Middletown water and sewer bills as of Jan. 1, according to Suez, the private company that operates the borough’s water and sewer systems.

The rate hike will add $5.35 a month to the average residential water and sewer bill, Suez spokeswoman Ghilianie Soto told the Press & Journal in an email.

The 50-year lease of the borough’s water and sewer systems to Suez that borough council and the former borough authority approved in 2014 provides for annual rate increases starting in 2019.

Suez added an 11.5 percent surcharge to Middletown water and sewer bills last April.

The surcharge was added in order for Suez to recover revenue from what Suez says was a shortfall in water usage in the first three years of the lease, from Jan. 1, 2015 through the end of 2017.

Middletown borough has a lawsuit pending in federal court against Middletown Water Joint Venture LLC, which includes Suez, to eliminate the surcharge. However the surcharge remains in place, pending a court decision.

The 5.1 percent rate increase is based upon adding the rate of inflation for 2018 — 2.6 percent based on the Consumer Price Index as reported by the U.S. Department of Labor — to a 2.5 percent “margin change” as specified in the lease agreement, Soto said.

The 2.5 percent margin change applies to each year of the lease through 2033. In 2034, the change is lowered to 2 percent for each year, and remains 2 percent for each year until the lease expires.

Each year the annual rate of inflation as determined by the CPI is to be added to the margin change, resulting in the total annual water and sewer rate increase.

Soto said that the 5.1 percent rate increase for 2019 will be evenly applied to all customers — commercial, industrial and residential — “unless otherwise directed by the borough of Middletown.”

Borough Manager Ken Klinepeter shared notice of the increase with borough council at its Dec. 18 meeting. He said the borough is reviewing the calculations used by Suez and the joint venture to arrive at the increase.

The borough is also reviewing the lease “as it relates to the application of the rate increase,” Klinepeter told the council.