CHESAPEAKE BEACH, MD – The Town of Chesapeake Beach announced today that first-quarter utility bills for Fiscal Year 2025 (FY25 Q1) will be released to residents and businesses. These bills will reflect the second and final phase of rate adjustments aimed at ensuring the long-term financial stability of the Town’s utility fund. For the first time in Chesapeake Beach’s history, the fund will be fully self-sustaining, with user fees covering the entire cost of water and sewer services.
The adjustment, which took effect on July 1, 2024, includes an increase in water and sewer rates, particularly for high-volume consumers. These changes are designed to ensure the utility fund remains financially stable without requiring subsidies from the general taxpayer base.
Utility Fund as an Enterprise Fund
The Chesapeake Beach utility fund operates as an enterprise fund, meaning that it must be supported entirely by user fees. This accounting approach ensures that the costs of water and sewer services are covered by the people and businesses that use them. Town officials stressed the importance of keeping the fund financially stable to qualify for essential infrastructure funding through grants and low-interest loans.
If user fees fail to cover these costs, the financial burden would shift to general taxpayers, a scenario the Town hopes to avoid. With this rate adjustment, officials are confident that the utility fund will continue to be self-supporting, meeting the demands of critical infrastructure without drawing on general tax revenue.
FY25 Utility Fund Charges
The new utility rates, which took effect in July 2024, were structured to promote water conservation by raising the cost for high-volume users. Table 1 offers a comparative overview of water and sewer charges in Chesapeake Beach against nearby jurisdictions. For a residential customer using an average of 12,000 gallons per quarter, both fixed and variable rates are factored into their total bill.
Variable Rates
The variable rate structure, which fluctuates based on total water consumption, is divided into tiers. As consumption increases, the rates per thousand gallons rise accordingly, reflecting the higher costs of servicing large water users. The Town implemented this tiered structure to promote responsible water use and to ensure those using higher volumes contribute more to maintaining the system.
Consumption Range (Gallons) Water Rate (per Thousand Gallons) Sewer Rate (per Thousand Gallons) 1 – 4,000 $3.27 $9.07 4,001 – 8,000 $3.34 $9.28 8,001 – 15,000 $3.42 $9.49 >15,000 $3.49 $9.68
These tiered rates were introduced to help stabilize the fund by generating more revenue from high-volume users, while keeping costs manageable for average consumers.
Fixed Fees
In addition to variable consumption-based fees, Chesapeake Beach applies fixed fees to create predictability for long-term budgeting and infrastructure planning. These fees, which are based on Equivalent Dwelling Units (EDUs), ensure that users contribute a consistent amount towards the maintenance of the water and sewer systems, regardless of fluctuations in consumption.
For FY25, the fixed fee for sewer services was increased by $50 per EDU, bringing the total to $100 per quarter. The fixed water fee remains unchanged at $50 per EDU per quarter. Commercial establishments in Chesapeake Beach pay fixed fees based on the number of EDUs assigned to their property, calculated by dividing total water usage by 190 gallons per day, as per the Town’s water and sewer manual.
Impact on Commercial Users
Commercial entities in Chesapeake Beach are billed based on their total EDU count, as illustrated in Table 3 of the Town’s rate documentation. The number of EDUs is determined by the establishment’s total water consumption, with commercial users paying a fixed fee multiplied by the number of EDUs.
This fee structure ensures that businesses with higher demand for water and sewer services contribute appropriately to the cost of maintaining the system. The updated rates aim to balance the financial needs of the utility fund with the Town’s goal of encouraging responsible water use among all users, both residential and commercial.
Next Steps for Chesapeake Beach Residents
Residents and businesses in Chesapeake Beach are encouraged to review their utility bills and reach out to the Town with any questions or concerns about the new rate structure. Additional information about the FY25 utility fund and rate calculations can be found on the Town’s website at https://bit.ly/cbwaterandsewer.
As Chesapeake Beach continues to prioritize the financial health of its utility fund, these adjustments mark a significant step towards ensuring long-term sustainability without imposing additional burdens on the general taxpayer base.
