Questions Raised Regarding Rate Increase in American Water Discussion

(MT. VERNON, IL) — In the battle over the proposed sale of the Mt. Vernon water and sewer system to a private company, questions have been raised about a statement made regarding a potential rate increase if the system isn’t sold. During a city council meeting Monday night, Councilman Dennis McEnaney said the city cannot afford to implement $30 million in necessary improvements and repairs to the system, without imposing a 60 percent rate increase on customers. According to Mt. Vernon City Manager Ron Neibert, that 60 percent figure assumes borrowing $7 million in year one and $2.5 million each year for the next nine years for $30 million in total investment. When the capital rate and COLA rate increases are combined, and a 3.25 percent interest rate is assumed with a 20 year ammortization, the cumulative total increase would result in more than 59 percent in year 10. However, there is a proposal by the organization Team of Mayors to create a Jefferson County utility cooperative rather than selling the system to Illinois American Water. The Team of Mayors say the cooperative would not only purchase and manage the system, but would retain the profits locally and it’s assumed would also make the investments necessary to make the needed improvements and repairs.