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WSSC board ranks priorities in new rate structure process

wssclogoLAUREL – As the Washington Suburban Sanitary Commission (WSSC) works on its new rate structure, the commissioners are weighing in with their priorities.

At a special meeting held Aug. 3, the commission heard from consultants and WSSC staff about a variety of considerations that go into formulating a rate structure. At the end of the more than four-hour meeting, each commissioner filled out a form ranking the eight considerations in three tiers, from “essential” to “important.” The top three factors were revenue stability, conservation/demand management, and rate stability, by a narrow margin.

WSSC staff will use this guidance provided by the commissioners to draft potential new rate structures, to be presented Aug. 15.

“They were all very close, incredibly close. We almost had five at the top,” said Chris Woodcock of Woodcock & Associates, a utility and water consulting firm. “Revenue stability and conservation are opposite each other. And those are the top two. So you’ve made our task for the next week or so quite difficult.”

The commissioners will then deliberate and choose one or more new rate structures to recommend to the county councils of Prince George’s and Montgomery counties for adoption in time for the fiscal year 2019 budget process.

In the commissioners’ rankings, coming in the second tier of importance were affordability, ease of understanding and ease of implementation. The lowest tier contained the criteria minimal customer impacts and cost-basis rates. However, all eight will be factored into the new rate structure’s development.

“All of these are important. They all have implications that are critical to the supply of water and wastewater services that WSSC has. And I don’t want to suggest at any time that any of these are not important,” Woodcock said.

Although the vote was very close, differences in opinion among commissioners were evident in the questions each posed to the consultants and staff. Lengthy discussion ensued over the affordability of WSSC’s current rates. Commissioner Omar Boulware wondered if affordability was even a concern in this area.

“If our ratepayers feel they are paying an unjustified amount for the services we are providing, I think that’s a very important piece of the puzzle that we will need in order to make our ranking. My suspicion is perhaps our rates currently are very affordable,” he said. “Over the past nine years, only about 3,000 folks have taken advantage of this program which is our longest serving (customer assistance program). As someone who’s making policy decisions, data like this tells me that affordability is not necessarily an issue.”

Commission Chair Thomasina Rogers, who represents Prince George’s County, said the relatively high delinquency rate, or the percentage of bills that are past due, and the approximately a third of service area residents who are seniors, disabled, low-income or veterans lead her to think affordability could be more of a problem. But Rogers said she would like to have more data available before deciding how affordability should factor into the discussion.

“I don’t want to gloss over the affordability issue, because I think it’s critical that we have the right data in making the decision,” she said.

Yet both board members were on the saem page in believing affordability measures should be included in some way going forward, even if through WSSC programs and not the rate structure itself.

William Stannard, board chairman at Raftelis Financial Consultants, said utilities across the country are taking more of an interest in affordability to help foster environmental justice, improve the companies’ image with customers and reduce account delinquencies as rates rise.

“Affordability of water and wastewater service is a growing concern across the United States. Over the last 16 years, national average water and wastewater rates have consistently increased annually several percentage points above the rate of inflation,” he said. “This is a trend that will continue for years to come as we deal with the need to reinvest in the aging infrastructure of systems, particularly major urban systems.”

Commissioner Fausto Bayonet articulated one of the balancing acts WSSC will have to successfully manage: the desire to encourage water conservation matched with the need to make enough revenue to operate.

“We talk about affordability, and we need to have those kind of programs to help our low-income customers. So how are these programs going to be implemented if we don’t have the revenue to do it?” he asked.

And the commissioners’ preferences aren’t the only factor WSSC must consider when developing rate structure proposals. For example, water conservation measures are mandated by the state of Maryland, according to Jay Sakai with 4 Tenets Consulting. WSSC is also bound by a compact called a low-flow allocation agreement (LFAA), which says the minimum flow-by for the Potomac River at the Little Falls Dam is 100 million gallons. The LFAA includes what are essentially water rationing mechanisms if that minimum is not met.

“Having a water conservation plan is a regulatory mandate under your permits. Pricing and rate structures are an effective tool at promoting conservation, but they’re not the only tool,” Sakai said. “But it’s something that you need to consider through this deliberation on the rate structure.”

Climate change presents an additional challenge, Sakai said. Changed weather patterns could result in increased rains in the area, making water more abundant, or they could cause more droughts. If precipitation amounts decrease by 10 percent during the summer in the region, the consultants predict the reservoirs will not contain enough water to maintain that 100 gallon flow-by.

“Climate change poses the hazard of uncertainty for everybody that’s involved in water supply planning,” he said. “There isn’t anybody around that’s willing to stand up and say, ‘climate change means you’re going to have less water or less rain,’ or more water and more rain, for that matter. But I think what everybody agrees on is it’s going to increase the variability.”

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Last modified onWednesday, 16 August 2017 14:12
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