Selectmen's Ad Hoc Water and Sewer Rate Study Committee Final Report -6-03-2005

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Executive Summary / Introduction Prompted by citizen questions regarding the fairness, appropriate inclusion of costs and increasing charges of the water and sewer rates, the Board of Selectmen formed the Ad Hoc Water and Sewer Rate Study Committee (Committee) in January 2004. The Committee was tasked with making a comprehensive review of and advising the Selectmen on the methodology, structuring and policies used in setting the water and sewer rates. The full text of the Board's charge appears at the end of this Executive Summary. The members of this Committee were well - qualified to take on this difficult and complex assignment. Their skills and experience included: economics, utility management, engineering, law, accounting, business, environmental protection and citizen advocacy. The Committee met more than fifty times from January 2004 through the end of May 2005. Its members devoted a significant amount of time between meetings to data collection and analysis. The Committee appreciates the support of the many Town employees who assisted us and the thoughtful contributions of the Selectmen liaisons. As the Committee's examination progressed, a number of concerns were identified. These issues were documented in the Committee's Interim Report on the Selectmen's Ad Hoc Water and Sewer Rate Study Committee, 30 September 2004, a copy of which is attached (in Volume 2). In its final report and recommendations, the Committee recognizes three broad themes: 1. Maintaining a safe, secure, well- maintained and well - financed water supply and wastewater facility is a crucial service provided by the Town. Lexington's water and sewer services are, by and large, operationally well - provided; 2. There are no clear, consistent or established policy guidelines for setting water and sewer rates, as manifest in: a. The steeply ascending rate block structure, which results in a significant premium for larger families and other high - volume users and substantially below -cost pricing for the lowest - volume users; b. The inclusion of certain items in the water and sewer rate structure that may more properly belong in the General Fund; c. The inclusion of certain items in the water and sewer rate structure that are duplicative, including deprecation, debt service and reserve deposits; and d. The absence of a clear and consistent policy for financial reserves; and for abatements and collection of overdue accounts; 11