Published April 19. 2012 4:00AM
Norwich - The combination of major proposed water system upgrades and the need for improved cash flow to qualify for low-interest loans for the nearly $8 million in projects has led Norwich Public Utilities officials to propose a 36.7 percent water-rate increase starting in July.
NPU also is proposing an 11.5 percent sewer-rate increase to cover increased operational costs and technology upgrades and maintenance.
The Board of Public Utilities Commissioners will hold public hearings Tuesday on both proposed rate increases, included in the proposed $7.5 million sewer and $9 million water budgets.
The hearing will be at 7 p.m. at Norwich Public Utilities headquarters, 16 S. Golden St.
Officials said the steep increases are necessary to upgrade systems that ultimately will cut costs and improve safety and efficiency.
Steve Sinko, division manager of business services, said the municipal water system is in need of mechanical upgrades, expected to cost an estimated $7.9 million over the next two years. Three massive pumps at the Deep River Reservoir that pump water to much of the city are more than 40 years old and must be replaced, Sinko said.
The replacement project calls for installing smaller, more efficient pumps and building two 1-million-gallon water tanks at the Deep River Reservoir - located at the Colchester-Lebanon border - for improved water delivery. The pump replacement and water tank project will cost about $2.5 million and would be done in the 2013-14 fiscal year if approved by the utilities board, Sinko said.
The huge water main that leads from the reservoir is nearly 100 years old, Sinko said. The upgrade calls for relining the pipe without the need to dig up the main.
A second aspect of the water transmission line project would be a money-making venture for NPU. A transmission station at the Norwich-Bozrah border pumps high-pressure water through the transmission line. A mini electric turbine generator, to be installed inside the line, would generate electricity from the water pressure, Sinko said.
The cost to reline the pipe and install the turbine is a combined $1.5 million.
NPU also hopes to upgrade the system for reusing water removed during the filtration process at both the Deep River Reservoir and Stony Brook Reservoir in Montville, lowering disposal costs and returning much of the water to the reservoirs for use. Those upgrades would cost $2 million at each reservoir.
To pay for $7.9 million of the upgrades, NPU is in the running for low-interest loans through the Drinking Water State Revolving Fund from the state Department of Energy and Environmental Protection. The 20-year, 2 percent loan, however, would come with conditions that the water division improve its cash balance - another reason for the rate increase, Sinko said.
The water division in the past routinely borrowed money from the more profitable electric division. The state loan would require paying off the remaining $400,000 on that loan and also erasing the current $261,000 operating deficit. Both would be accomplished with the rate increase.