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Council questions WSSC rate structure change

LAUREL – A change in county water bills is almost certainly coming, but exactly how much more (or less) residents will pay is still to be determined.

On March 30, the Prince George’s County Council Transportation, Housing and Environment Committee (THE) held a joint meeting with their counterpart from the Montgomery County Council, the Transportation, Infrastructure, Energy and Environment (T&E) committee to hear from Washington Suburban Sanitary Commission staff about progress on the utility’s rate structure study. WSSC has to change the rate structure to remain financially viable, officials say.

“There’s always this tension between having enough revenue to meet the needs for providing the services, both water and sewer, but also on the capital side,” said Council member Todd Turner, chair of THE. “People are consuming less water, so because the revenues aren’t coming in because of the consumption, what are you going to do? Unfortunately, nothing goes down in cost, it seems like, so in making that (increase) reasonable, there’s a balance that we have to find as part of this process.”

WSSC staff and a bi-county workgroup of customers, government staff and other stakeholders came up with seven potential new fare structures, but only three alternatives were ultimately chosen for further study. Two of the rejected options would require a change in state law to allow WSSC to differentiate between residential and commercial customers.

The three alternatives WSSC is studying all involve four tiers; the other rejected options had eight and one, respectively. The four-tier alternatives vary with the consumption level, as well as the multiplier between tiers (or, how much more per gallon water in the higher tiers costs). All are intended to be revenue-neutral for the utility. The rate structure change would also not affect the fixed charges, such as the new infrastructure fee tacked onto customers’ bills.

Currently, WSSC uses a 16-tier rate structure and charges consumers the highest rate for every gallon of water used. For example, a consumer who uses 52 gallons of combined water and sewer per day is charged $8.81 for each 1,000 gallons of water consumed. The new structure would instead bill “through the block.” In the example given, under current rates, the consumer would pay $7.68 per 1,000 gallons for the first 49 gallons per day and the $8.81 rate per 1,000 gallons for the other three gallons per day in the next tier.

WSSC said billing at the top tier has the greatest effect in terms of encouraging customers to conserve water. However, the Maryland Public Service Commission ruled last week that the structure is discriminatory, and WSSC acknowledges it creates a perceived penalty against large-volume customers. In effect, large-volume customers subsidize bills for the low-volume customers that make up more than 95 percent of WSSC’s clients.

Although the rate levels for the new structure are not set yet, WSSC staff provided the council committees with estimated impacts on customers’ bills. For the average low-volume customer, bills would likely increase because the base rate for low-volume tiers would have to rise to make up for the lack of subsidy from the higher-volume tiers.

“By changing the methodology for how volume is billed—going from billing it all in the top tier to billing incrementally as you go through the tiers—that will in and of itself have an impact on small-volume customers because the lower tier rates are higher,” said Pam Lemoine with engineering consulting firm Black & Veatch.

Depending on how the tiers are set, the highest-volume customers could see either lower or higher bills.

The bi-county workgroup expressed concerns about how much of the burden would be shifted to low-volume customers and requested WSSC look at other possible tier and multiplier combinations to mitigate that.

Montgomery County Council member Tom Hucker had a similar concern about the poorest customers, who are unable to pay their bills under the current rate.

“Did any of these analyses consider the impact of any change in the rate on nonpayment of accounts? If you have a bunch of people who can’t pay now... what happens when we raise the rates on our poorest customers?” he said. “You can do that in what seems to be a revenue-neutral way, but actually if you don’t take into account the ratio, if it goes up, you’re going to be left with less revenue.”

WSSC has money available to help customers who struggle with paying their bills. Beach also pointed out that the rate changes could be phased in over several years to give people time to adjust their budgets.

“What you’re going to see at different levels is higher bill impacts, especially for low-volume residential. One of the options to consider is phasing that in over a number of years—three to five, possibly even longer,” he said.

The County Council members were also concerned about giving residents time to make their opinions on the rate structure changes known. WSSC’s timeline includes three public hearings in May. Then the bi-county commission will make a recommendation on which structure to put in place. The WSSC commission and the County Council would then vote on that recommendation. Staff said that will give them enough time for customer outreach and to include the new rates in its next budget proposal before they go into effect July 1, 2018.

“The timing there, we believe, is important for a few reasons, one of which is, after approval we want to begin a very aggressive strategy of educating our customers on the new rate structure. Then, in the fall we’re going to begin our spending affordability guidelines. We feel it’s important that it should be done under the new rate structure,” Beach said. “And we’re working on a new billing system, and it’s very important for us to program that.”

But Council member Mary Lehman questioned whether that was feasible.

“I’m really skeptical about the notion of adopting something in June of this year,” she said. “We’re talking about the two largest counties in the state of Maryland. We have almost 2 million residents between us. I don’t think three hearings is nearly enough.”

Roger Berliner, chair of the Montgomery County Council, agreed and suggested he would not bring the rate structure change before his council unless residents had had more time to weigh in.

@emilyblackner 

 

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