Beginning on January 1, 2019, industrial customers of the Council’s wastewater treatment services will have another option to pay SAC for their process wastewater flows.
Benefits of the proposed changes include:
Industries have an option to spread out up-front costs while their production is being established.
Ongoing costs will better match the business cycle.
Permit renewal fees will not include Sewer Availability Charge (SAC) payments.
Water conservation efforts will be encouraged because it yields more immediate SAC savings.
Over time, the change is revenue-neutral for Metropolitan Council Environmental Services (MCES).
What is SAC?
SAC is a one-time fee that MCES charges to local governments when a residence, business, industry or institution connects to the wastewater system for the first time, or when their potential demand for wastewater capacity grows. SAC is used specifically to pay for the extra capacity built into wastewater facilities to accommodate future growth.
Why MCES is changing the way it will charge industrial SAC
Currently, industrial SAC has a commercial component (for building and/or office space) and an industrial process flow component (for production wastewater). Once SAC is paid for these two components, the Council establishes a corresponding baseline maximum capacity that requires more SAC if exceeded.
Every three years, MCES reviews an industry’s flow volume to see if the baseline has been exceeded. If it has, MCES gives the industry one year to reduce flow or additional SAC is charged.
This method poses several problems:
SAC baselines can be exceeded for up to three years without detection.
Processing and review requires significant staff time for both industries and MCES.
Industries may face SAC bills that result from temporary or infrequent increases in process flows (for example, a brewery that doubles its production for the Super Bowl).
What’s new about industrial wastewater charges in 2019
MCES will eliminate the three-year review and collect an ongoing industrial capacity charge (ICC) for flow that exceeds the established baseline. The ICC is like a rental charge versus SAC, which buys the capacity. Industries have two options:
Pay an ICC whenever volume exceeds baseline, at the time of the industry’s regular reporting period (quarterly, half-yearly or annually). The 2019 rate will be $2.10 per 1,000 gallons over the baseline. Industries pay the charge directly to MCES, rather than to their local government.
Purchase additional SAC to increase their baseline. This can be done at start-up as well as at each reporting period. Currently, one SAC unit costs $2,485 and pays for 100,000 gallons per year of process flow; this charge won’t change for 2019. As is current practice, industries will pay SAC to their local community, which then forwards it on to MCES.
Industries and local governments responded well to the proposal during conversations this year, according to Ned Smith, Director of Finance and Revenue for MCES.
“These changes grew out of a request from our customers and has been well-vetted with our customers, local governments and metro cities,” Smith said. “The changes reflect our ongoing efforts to be efficient, responsive and transparent in our business practices and relationships with our customers.”
Of all industrial SAC units, 40% are commercial SAC and 60% are for process flows. Industrial SAC revenues for process flows are about 4% of all SAC collected annually.
MCES rate policies