Water revenue flowing: Rate hike improves authority’s finances

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March 14, 2010

BY MIKE FAHER The Tribune-Democrat Sun Mar 14, 2010, 10:58 PM EDT

JOHNSTOWN — Since June, residents in 17 Johnstown-area municipalities have been paying

25 percent more for their water.

And that has made a big difference for Greater Johnstown Water Authority, where a new report shows that 2009 revenues topped the $8 million mark for the first time since 2005.

That’s despite the authority continuing to chart a steady decline in its customer base.

“(The rate hike) helped sustain us,” said Ed Cernic Sr., authority board chairman. “I think we’re going to be in good shape.”

From 1998 through the first half of 2009, authority leaders had kept water rates stable.

But simple mathematics forced their hand: The number of customers had been dropping for nearly two decades, while costs had risen.

Without an infusion of revenue, officials had projected that cash flow would sink dangerously low by 2011. The authority also had to maintain an adequate monetary reserve to meet debt requirements.

Hence the 25 percent rate hike, which raised the average household’s annual water bill by more than $60.

As a result, residential revenues jumped by nearly $750,000 from 2008 to 2009, according to a report released last week by RDM-Johnstown, the authority’s management company.

Receipts from commercial and industrial customers also were up, leading to a total revenue boost of more than $900,000 for the year.

“It’s all the rate increase,” said Mike Kukura, RDM-Johns-town’s resident manager.

At the same time, though, officials also have been looking to grow their customer base in order to generate more cash.

Authority leaders can’t do anything about the Johnstown area’s population loss. But they’ve branched out by signing contracts to sell water to other areas, including Conemaugh Township in Somerset County.

Another such initiative is a proposed water connection between Johnstown and Ligonier.

With a projected price tag approaching $10 million, the ambitious project would send a new water line over Laurel Ridge. Ligonier would get a better water source, while the Johnstown authority would gain new customers.

“I’m very optimistic,” Cernic said. “I think it will be beneficial for us and the other areas.”

The state Department of Environmental Protection has granted a permit for the project.

But money remains an issue, with authority administrators pursuing both low-interest loans and grants through

state agencies.

“We’re working on funding,” Kukura said, adding that the project’s focus on regional cooperation may be appealing for state officials deciding where to send grant money.

No matter what projects the authority pursues, it’s guaranteed that RDM will be leading that effort for years to come.

In December, authority board members extended the company’s management contract by five years. The deal now runs until February 2018.

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