Clarification on Newton Water Rates to IRUA

A recent decision of the Newton City Council on water rates to IRUA (Iowa Regional Utilities Association) was made to protect and invest in our local water utility. Some community members have requested additional information on the Council's decision to adopt increases to IRUA rates.

After more than a year of meetings between the City and IRUA in which rate increases were discussed, IRUA cancelled two scheduled meetings in August and September of 2023 and refused to schedule any further meetings. On October 16, 2023, the Newton City Council adopted Resolution 2023-279, awarding a professional services agreement for a water Cost of Service Study. This study was specifically completed to determine how much it costs the City of Newton to produce 1,000 gallons of water for IRUA. The study, completed by a licensed engineer experienced in producing cost of service studies, determined it costs the City $3.27 to provide IRUA with 1,000 gallons of water.

Based on the Study, the City Council increased IRUA's rate to $3.27 per thousand gallons of water. The City is currently losing money providing water to IRUA and, after the increase goes into effect, the City will be providing water at the City's cost. Any rate below $3.27 per thousand would require City residents to continue to subsidize IRUA customers.

It is important to note the water cost itself is a small portion of the amount charged by IRUA to provide water to its customers.

The new IRUA rate of $3.27 per thousand gallons is significantly lower than IRUA's contracted amount with Pella, which is $4.30 per thousand gallons, and is also lower than most other providers. Table 6.1 (shown below), from the Cost of Service Study, lists wholesale water rates charged by cities to rural water districts in Iowa.

Prior to the adoption of the ordinance by the City, the City provided a letter to IRUA notifying them the City intended to review the rates charged to IRUA. A copy of the Study was provided to the IRUA on March 12, 2024. All actions of the City Council are open to the public and posted in conformance with Iowa Open Meetings laws. The purpose for having second and third readings of ordinances is to allow City residents to have input. Since residents are not impacted by this water rate increase, there was no reason for additional readings of this ordinance.

The City of Newton has not only followed every requirement under the contract, but exceeded those requirements in order to establish a fair rate for IRUA. The rates for July 1, 2024 and July 1, 2025 are now established; however, the City is hopeful IRUA will take the opportunity to resume conversations to negotiate rates for July 1, 2026 and beyond.

Evelyn George
Mayor, City of Newton