Rate Policy
MCES Rate Policy
Rates and Charges Policy
The Council will design and adopt fees and charges using a regional cost of service basis:
- Municipal wastewater charges will be allocated to communities uniformly, based on flow.
- Industrial wastewater strength charges will be uniform, and proportionate to the volume and strength of discharges.
- Load charges for septage, portable toilet waste, holding tank wastewater, and leachate liquid wastes will be uniform for each type of load, and based on the volume of the load and the average strength of the types of loads. A special facilities component, and an administrative fee for out-of-region wastes will be included.
- Service Availability Charges (SAC) will be uniform within the urban service area of the region. SAC for a Rural Growth Center where a treatment facility is owned by the Council will be based on the reserve capacity of the plant and the Council's debt service specific to the Center. SAC for a Rural Growth Center where interceptor facility(s) are owned by the Council will be the urban SAC charge plus an incremental charge based on the reserve capacity of the specific interceptor(s) and the Council's debt service specific to the Center.
The Council will seek customer input prior to, and give at least three months notice of, any material changes in the design of fees and charges.
The Council will maintain wastewater rates for MCES that enable the division to:
- Meet wastewater regulatory requirements;
- Implement MCES infrastructure rehabilitation and repair needs;
- and Provide wastewater capacity for growth consistent with the Council's 2030 Regional Development Framework.
Retail Rates:
In 2008, the regional average retail residential sewer rate per household in the Twin Cities for wastewater treatment was $195. That yearly charge, compared to charges in similar-sized districts, is substantially below the national average, which was $318 in 2008 based on National Association of Clean Water Agencies (NACWA) survey. In this survey, MCES ranked fifth among its peers in retail rates. Peer agencies are considered as all those that treat more than 100 million gallons of wastewater per day and respond to NACWA's triennial Financial Survey. A summary of rankings based on the last five surveys follows:
| Surveyed Rates For | MCES' Retail Rate Ranking* |
|---|---|
| 2008 | 5 of 22 (81st percentile) |
| 2005 | 6 of 23 (77th percentile) |
| 2002 | 6 of 31 (83rd percentile) |
| 1999 | 9 of 30 (72nd percentile) |
| 1996 | 8 of 29 (75th percentile) |
* Because of the different number of responses in each year, the percentile rank of MCES is also provided (this represents the percentage of respondents that reported higher retail rates than MCES).
Pricing Philosophy
Environmental Services rates are based on a region-wide average cost-of-service pricing philosophy. In other words, users are charged for the costs that MCES incurs to provide the specific services used. Charges for basic wastewater flow are based on the volume of flow discharged by each community and MCES' average cost to treat wastewater. Charges for new capacity demand are intended to pay for the approximate average cost of growth. Charges to treat high strength wastewater are charged to the specific industrial users that discharge the high strength wastewater.
For wastewater utilities, some aspects of the charging system are prescribed by Environmental Protection Agency regulations (35.929-1) that state that the EPAs Administrator may approve a user charge system based on actual use described as follows:
“A grantee's user charge system based on actual use (or estimated use) of waste water treatment services may be approved if each user (or user class) pays its proportionate share of operation and maintenance (including replacement) costs of treatment works within the grantee's service area, based on the user's proportionate contribution to the total waste water loading from all users (or user classes). To insure a proportional distribution of operation and maintenance costs to each user (or user class), the user's contribution shall be based on factors such as strength, volume, and delivery flow rate characteristics.
”
Minnesota Municipalities are required to design charges "as nearly as possible proportionate to the cost of providing the service" (M.S. 444.075(36). The Council supports this by designing its own fees based on cost-of-service.
Finally, cost-of-service pricing provides the most rational pricing signals to users thereby improving the economy of the region. For example, an industrial site that is considering whether or not to add pre-treatment equipment at their site will be encouraged to make the best decision for the region if their wastewater charges reflect the actual cost of the service.
Questions?
Contact MCES Finance Office by e-mail