A revised rate study rate study is currently scheduled for presentation at the CBJ Assembly Finance Committee (AFC) meeting on April 30, 2025.  The AFC April 30 meeting agenda and packet is available at the link below https://juneau-ak.municodemeetings.com/.  Additionally, you can read the City Manager’s latest memo on the Utility Rate Increase HERE.

CBJ and FCS hosted an open house at Thunder Mountain Middle School Library to discuss utility proposed rate increase options.

FCS and CBJ Staff presented the 2024 Rate Study to the Assembly Finance Committee.

Meeting Information (Agenda, Packet, & Minutes):

Assembly Finance Committee | City and Borough of Juneau Alaska Meetings

FCS and CBJ staff presented the 2024 Rate Study presentation.

Meeting Information (Agenda, Packet, & Minutes):

Assembly Public Works and Facilities Committee | City and Borough of Juneau Alaska Meetings

The CBJ Utility contracted DOWL and FCS to conduct a rate study during 2024.

Discussed preliminary outlook for rates.

Meeting Information (Agenda, Packet, & Minutes):

Assembly Public Works and Facilities Committee | City and Borough of Juneau Alaska Meetings

In December 2022, the Utility Advisory Board met and reviewed the utility financial outlook.

Meeting Information (Agenda, Packet, & Minutes):

Utility Advisory Board | City and Borough of Juneau Alaska Meetings

The CBJ water and sewer system is large and complex. Although CBJ has placed an emphasis on maintaining our infrastructure, much of which has performed past its useful lifespan, there are areas and equipment that require updating or replacement. Costs associated with proper ongoing maintenance of facilities and systems have also increased over the past several years.

Previous rate studies have recommended larger rate increases that were not fully adopted by previous City Assemblies, which has left the Utility in a revenue deficit. Although the Utility has ensured that funding is available for critical maintenance and repair needs, reduced revenue overall has resulted in a significantly increased deferred maintenance backlog.

Raising rates now will allow the Utility to invest in critical repairs and replacements for both the water and wastewater systems in Juneau. This will ensure properly maintained, hygienic, and safe water & sewer systems for CBJ residents in the coming decades.

The proposed rate increase would be applied equally to all customer types for both water and wastewater, including commercial users and cruise ships.

Utility Rates are determined by the City Assembly and become effective through adopted CBJ Ordinance.

• City Assembly Website
• Current CBJ Rate Ordinance – Water Utility
• Current CBJ Rate Ordinance – Sewer Utility

The CBJ utility is an enterprise fund – that is, it is self-supporting. Outside of any special funding (i.e. grants, bonds, loans), the ratepayer provides funding that covers the full cost of running the city’s large and intricate water and wastewater systems. This includes capital improvement projects, major facility upkeep, operational costs, and salaries.

A model to measure the sewer financial impact of a current cruise ship tour season was created.  It modeled the amount of wastewater costs associated with the summer season (May – Sept) using published ship visits and assuming all passengers disembarked for shore activities.

In summary, using 2024 actual fees collected by CBJ, the cruise lines paid 20% more than a CBJ Commercial user would for the amount of loading contributed by both the cruise ship unloads and their estimated passenger impacts to the CBJ sewer while ashore.

As stated previously, the cruise ship companies pay the highest cost per gallon of Wastewater of all industrial sectors in Juneau under the current code.  Based upon the fees paid by the industry in 2024, they would have paid for 3 times the sewer fees for their contribution than current Juneau industrial users would have paid for the same discharges.

Vacation rental properties are typically residential properties, so they are likely charged residential rates.  Some are likely metered while others are flat rate. Under the code it appears that it depends upon the physical configuration of the property.

The Utility has researched the question about whether it would be advantageous to move all residential customers to metered billing. The following was determined:

• Most customers would see an increase in billing per month if they moved to metered bills. According to the EPA, the average American uses around 82 gallons per day of water. This means that any 2-person home would, on average, use more than the 4000 gallons of allotted water in the current metered rate structure.
• Only those metered customers who use less than 4000 gallons per month would see a savings, at about $12.87 a month. This does not consider the initial cost of installing meters, which under current CBJ Water code are passed on to the ratepayer. As soon as a metered customer used 5000 total gallons per month, assuming they were a metered water and sewer, they would see a total bill increase of $5.
• The total cost of installing meters in CBJ for current flat rate customers is estimated to be at least $3M in parts alone, plus substantial labor. These costs would be passed off to rate payers either directly per household or through rates to cover the capital investment.
• Following installation of meters, the meters team would need to expand, as would the infrastructure used to support that team. Estimated annual costs would exceed $500k in additional meters technicians, administrative support, office space, vehicles, increased inventory, and more.
• The revenue associated with metered usage cannot be calculated, so it is difficult to determine if the city would see sufficient additional revenue to offset the increased costs associated with reading, maintaining, and billing a 400% increase in meters. It is likely that the increased costs would result in necessary rate increases that would negate any savings that few ratepayers would realize even in the short term.
• Because of the cost of meter installation and maintenance, almost all Alaska communities do not have metered water service. Juneau’s model of flat rate residential service is common in Alaska.

These cities that have only primary treatment have a waiver from the EPA called a 301(h) waiver.  An EPA 301(h) waiver refers to an exemption under Section 301(h) of the Clean Water Act (CWA) that allows publicly owned treatment works (POTWs) that discharge wastewater into marine waters to apply for a modified discharge permit. This waiver grants permission to discharge less-than-secondary treated effluent into ocean waters, provided the discharge does not significantly degrade water quality or harm marine ecosystems.

Within Alaska, the waiver only applies to secondary treatment parameters (BOD5, TSS, % percent removal and pH).  Fecal coliform and other pollutants with State of Alaska water quality criteria do not qualify for a waiver.   All of the EPA 301(h) waivers in Alaska are under review and there is a possibility some may be revoked which would require these communities to implement secondary treatment.

According to historical records, the CBJ had applied for a 301(h) waiver and was subsequently denied.

Both utilities show a slight decline in FY2027 as interest earnings are projected to decline.

Water and Sewer Utilities typically use a few basic rate models.  Most common types of rate models are Flat Rate, Metered – Uniform, Metered Increasing, Metered Decreasing, Budget Based and Cost of Service Models.

Flat rates are where all customers pay a fixed fee regardless of usage.  Some advantages are that it is simple to administer and understand while requiring less equipment in the form of meters and personnel to maintain them.  They also provide stable revenue for the Utility.  Some disadvantages are that they do not provide conservation incentives and low use customers may feel overcharged.

Metered Uniform are rates where a constant price per volume of water is charged. Some advantages are that they do provide some conservation incentives, compared with a flat rate structure, and are also easy to understand.  Some disadvantages are that they provide a less stable revenue if demand fluctuates and require meters and workers to read and maintain them.

Metered Increasing are rates where it gets more costly as usage increases.  Some advantages are that this rate structure promotes conservation, especially where water is in short supply or expensive to produce and that it can provide best cost for essential community water uses.  Some disadvantages are the difficulty in explaining this as well as that it requires meters and workers to read and maintain them.

Metered Decreasing are rates where it water gets less expensive as usage increases.  Some advantages are that decreasing rates support large users, such as industries and promote growth in those businesses.  Some disadvantages are that it discourages conservation, and that it requires meters and workers to read and maintain those meters. This type of structure is typically reserved for large commercial or industrial users only.

Budget Based is a customized rate structure based on household size, property size, or historical use records.  Some advantages are that it seeks an equitable distribution of cost using a greater level of detailed customer data and that it has provided revenue stability to Utilities.  Some disadvantages are that it is rather complex to implement and manage, it requires significant data and can be challenging for customers to understand.

Cost-of-Service is a cost allocation analysis that determines the actual cost to serve different customer types (e.g., residential, commercial, etc.). Any of the above rate structures can be implemented along with a cost-of-service analysis. The cost-of-service analysis requires good customer data to be completed.

The overwhelming majority of communities in Alaska have non-metered residential water and sewer service.  That is, they have flat-rates as Juneau does.

On the commercial side, different communities have developed different rate structures for small and large commercial users, including rentals. AWWU has different rates for different classes of rental properties ( Metered Commercial and Multiple-Dwelling-Unit Residential Accounts) based on size and classification.

Some rate studies for smaller AK communities have rate models that rely more heavily on grant and loan funding. However, because of the relatively high CBJ average income, Juneau does not qualify well for Municipal Grants and Loans programs.

The idea of “fairness” is typically addressed through the price of service delivery. For instance, CBJ currently charges cruise ship customers more per gallon than other users and collects detailed data on the volume and strength of the discharges. This acknowledges that it costs CBJ more to serve cruise ships than a typical user. For an entire community, whether you are charging each customer too much or too little is analyzed through a Cost-of-Service analysis.

has many water main breaks in recent years.   Ductile Iron pipes show highest frequency of breaks, primarily due to corrosion, pitting, and holes. Copper line (typically .75″ to 1″) failures are second most common, usually failing due to age, wear, or pitting. Here is a recent history of number of water line breaks by year:

1. 2016: 12
2. 2017: 4
3. 2019: 2
4. 2019: 5
5. 2020: 6
6. 2021: 8
7. 2022: 7
8. 2023: 12
9. 2024: 13

Other water infrastructure incidents include communication cables damaged during a storm that required manual operation for days until the repair was completed.

The Wastewater Utility tends to have less frequent piping failure issues than the water distribution system does.  This may be due to the lower pressure that sewer pipes experience in general combined with the materials use.  The materials are mainly asbestos concrete (oldest), polyvinyl chloride (PVC) and polyethylene (HDPE) most recently.

Wastewater collection infrastructure has experienced failures in the pumping equipment that conveys waste to the plants. Older model lift stations are failing more frequently and require repairs and more attention. The West Juneau sewer lift station failed due to flooding of the station and had to be rebuilt. A large sewer force main break in 2024 was repaired but it indicated the need for overall replacement.

Wastewater Treatment Plant infrastructure has also experienced failures.  The Control system for the Mendenhall Treatment plant failed in the summer of 2024 and could not be restarted due to proprietary old code and processors.  The plant ran in manual mode for two weeks with more operators working around the clock until an interim solution was implemented.  The plant also had a ventilation duct failure due to corrosion among other issues.  The Juneau-Douglas plant is at end of life and needs replacement of structural and process equipment as well.  The JD plant’s clarifier building (one of four original 1970’s era buildings) is getting a new roof and other equipment replaced in 2025 and 2026.  Upgrades to process equipment, e.g. improved grit removal and coarse screens, will also occur in 2025-2026.

The Utility is always focus on increasing efficiency.  Some efforts are being built into projects to rehabilitate old infrastructure.  For instance, the Utility just upgraded the Mendenhall wastewater treatment plant’s 1980’s era control system with new technology.  Modern instrumentation was also installed that provides the ability to reduce energy usage, reduce manpower to run the liquid train and better control biomass growth.  All this should reduce operational costs.

A project scheduled for completion in early 2026 will allow us to reduce wastewater biosolids shipping costs by fitting more solids into each shipping container.

The CBJ Utility is investigating eliminating shipping biosolids altogether by thermally treating them locally.  This technology will be explored over the next 18 months.

There are some municipal programs available to assist low income or elder residents, including:

• Anchorage has a program called “Coins Can Count. It is a voluntary program providing Anchorage Water & Wastewater Utility customers an opportunity to help members of our community who may be facing a financial crisis and cannot pay their water and/or wastewater bill.
• The City of Ketchikan also has an Elder rate which reduces water bills by 11.2%. There does not appear to be an Elder rate for sewer service.
• Sitka does not appear to have any reduced rates for any specific type of customers.
• While not specific to Low Income, the City of Kotzebue has an Elder/Disabled rate that is approximately 40% of the standard Residential Rate for both water and sewer service. This rate was determined by historical precedence and was not determined through a cost of service or other type of comprehensive analysis.

There are State programs available to offset utility costs for homeowners, including:

• Alaska Temporary Assistance Program (ATAP) administered by the Alaska Department of Health (DOH).
• Senior Benefits Program administered by the Alaska DOH .
  • Only available to people 65 years of age or older.
• General Relief Assistance (GRA) program administered by the Alaska DOH
  • Utility assistance is only available if the customer has received a shut-off notice.

The rate study shows that currently the Utilities charge enough to cover operating costs and to cover some Capital Improvements.  Inflation however has risen dramatically since the pandemic and rates have not kept pace.  Starting in FY2028, the sewer utility revenue is projected to not cover operating costs or Capital Improvements without rate increases.  Capital investment is important considering the CBJ Utility Infrastructure age is approaching 50 years in many areas.

Income received from Social Security is adjusted for inflation using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This index is administered by the Bureau of Labor Statistics. The index tracks the average cost of an assortment of goods across the nation. This includes food, beverages, housing, transportation, and other types of costs. Cost inflation for CBJ’s utilities does not necessarily rise or fall in unison with the costs tracked by the national CPI-W index.

In the near term, rate increases cannot be tied to an inflationary index such as CPI-W since recent utility increases have lagged inflation. In other words, the utilities are in catch-up mode. Long term, an automatic rate increase tied to an inflationary index can be implemented, but it would be important to monitor the financial health of the utilities to ensure no deviation is necessary.

Yes, increased consumer awareness can significantly reduce the costs of water and sewer utility costs. By promoting efficient water use and conservation behaviors, consumers can lessen the demand for water, requiring less treatment and reducing the strain on the distribution network.  Also, by being aware of responsible water usage practices and the impact of sewer pollutants, consumers can adopt behaviors that reduce the volume and contamination of wastewater, leading to lower treatment demands and associated costs.

Over the past few years, the Water and Wastewater Utilities have written off the following:

• FY23: $4430
• FY24: $3147
• FY25 (YTD): $2750

The following is the other funding mechanisms, including Property taxes (bonds) and sales taxes (1% and 3%) that the Utility enterprise funds have received since 2009.

Water Fund:

• FY13:
  • ADEC Loans: $1,270,000
• FY15:
  • ADEC Loans: $6,000,000
• FY16:
  • Temporary 1% Sales Tax: $1,527,000
• FY20:
  • Temporary 1% Sales Tax: $1,000,000
• FY21:
  • Temporary 1% Sales Tax: $1,000,000
  • ADEC Loans: $4,000,000
• FY25:
  • Areawide & Streets 3% Sales Tax: $1,175,000

Wastewater Fund:

• FY10:
  • ADEC Loans: $3,314,000
• FY11:
  • Temp 1% Sales Tax: $415,000
  • Areawide & Streets 3% Sales Tax: $503,900
• FY12:
  • Temp 1% Sales Tax: $525,000
• FY13:
  • ADEC Loans: $825,000
• FY15:
  • ADEC Loans: $23,400
• FY16:
  • ADEC Loans: $10,000,000
• FY17:
  • ADEC Loans: $10,000,000
• FY19:
  • Temp 1% Sales Tax: $2,000,000
• FY20:
  • Temp 1% Sales Tax: $2,600,000
• FY21:
  • Temp 1% Sales Tax: $1,500,000
• FY22:
  • Temp 1% Sales Tax: $3,700,000
• FY23:
  • Temp 1% Sales Tax: $3,200,000
• FY24:
  • Temp 1% Sales Tax: $500,000
• FY25:
  • Areawide & Streets 3% Sales Tax: $670,000
  • Bonds: $10,000,000