Water Rates - It isn't as bad as you think. It isn't bad at all.

I have another constituent we shall call DL. He wants to know when water and sewer rates have been raised in the past and for what reason. For the purposes of this discussion I am going to assume that DL is only interested in a typical residential rate.


The typical residential ratepayer has a 5/8" meter. Some residential customers have 3/4" meters, especially in this part of town. We have a whole host of meter classifications from residential to large industrial. Within each user classification there are meter sizes ranging from 5/8" to 8". You can set the rate high on one or more classifications and/or meter size as a way of keeping the rate low for others. Each rate classification has a minimum meter charge that includes 200 cubic feet of water or sewer and a volumetric charge that is based on use of 100 cf of water or sewer. In other words, if you use only 200 cf of water per month, you only pay the minimum meter charge. For each additional 100 cf of water, you pay a volumetric rate.

So, to answer the question, a typical residential customer has seen rate increases as follows:
Water
1987 - 6% increase in meter minimum, 31% increase in volume charge
1988 - 7% increase in meter minimum, 7% increase in volume charge
1989 - 7% increase in meter minimum, 7% increase in volume charge
1990 - 7% increase in meter minimum, 7% increase in volume charge
1991 - 6% increase in meter minimum, 6% increase in volume charge
1992 - 6% increase in meter minimum, 6% increase in volume charge
No change in water rates between 1992 and 1998
1998 - 16% reduction in meter minimum, 0% change in volume charge
1999 - 25% reduction in meter minimum, 25% reduction in volume charge
No change since 1999

Sewer

1987 - 6% increase in meter minimum, 31% increase in volume charge
1988 - 7% increase in meter minimum, 7% increase in volume charge
1989 - 7% increase in meter minimum, 7% increase in volume charge
1990 - 7% increase in meter minimum, 7% increase in volume charge
1991 - 6% increase in meter minimum, 6% increase in volume charge
1992 - 6% increase in meter minimum, 6% increase in volume charge
1993 - 12% increase in meter miniumu, 12% increase in volume charge
1994 - 12% increase in meter minimum, 12% increase in volume charge
1995 - 12% increase in meter minimum, 12% increase in volume charges
No change since 1995

To make all this gibberish more clear, I took my water and sewer bill and applied the appropriate water and sewer rates for the last 22 years. I was surpised to discover that I had to go back to 1987 to find a year when I paid less for water than I do now. Not to sound too much like Fred Buck but in 1987, Ronald Reagan was President of the United States, Margaret Thatcher was Prime Minister, Fatal Attraction was the hot movie and gasoline averaged 89 cents a gallon.

To find a time when I paid less for sewer than I do now, I had to go back to 1994. In 1994, a gallon of gas averaged $1.09, average home price was $119,000 and average annual income was $37,000/year.

Since 1987 for water rates and 1994 for sewer rate, I have paid the same or more. So, If Metro were to raise my water rate 27% or less, I would still be paying the same or less than I did 1992-1997. Sewer took some pretty steep increases in the late 1980's and 90's probably due to the cost of dealing with overflow abatement program. But that has been a long time gone now.

Let me know if you have any more questions.

Water, Water Everywhere

I have this constituent, let's call her TB. I first met her going door-to-door campaigning in the summer of 2006. It was the height of the "sprinkler debate" when MWS had suspended the sprinkler adjustment as a way to raise revenues without a general rate increase. Well, TB was pretty fired up about that and a stormwater problem. She invited me in, gave me some water to drink and told me that, in no uncertain terms, she expected results were she to vote for me.

Thus began my involvement with water rates, stormwater funding and infrastructure financing.

After the news these past two weeks about stormwater funding and water and sewer rate increases, TB had a few questions. Rather than just respond to her email, I thought I'd just answer them here since she probably isn't the only one with questions. So, here it goes TB. Fire off another email if I missed anything:

1. It is tough to compare us to Memphis for a several reasons. Memphis has a combined utility called Memphis Light Gas & Water that has powers similar to NES, meaning they don't really have to do what the City Council and Mayor tell them to do. Sewers and Stormwater are handled through Public Works. MLG&W takes water out of the ground and it requires virtually no treatment because it comes from a huge acquifer that lies beneath west Tennessee and northern Mississippi. As an aside, Mississippi is not too thrilled about this arrangement and has sued saying Memphis is stealing their water. Also worth noting, Memphis made a decision to develop seperate storm and sewer systems about 100 years ago so they haven't been saddled with much of the regulatory problems Nashville has faced as a result of having a combined system in the downtown area. Our rate increases are designed to keep us in line with other cities but mostly to recover the costs of maintaining, repairing and improving the system. Our costs are going to be slightly different than other cities.

2. Then Mayor Phil Bredesen did not take any money out of MWS, per se. What he did was take advantage of a state law that allowed City governments to charge utilties a Payment In Lieu Of Taxes. MWS was charged about $4 million a year in PILOT. NES also pays PILOT. The MWS PILOT was then pledged to pay debt service on the Titan's stadium. Like it or not, we are stuck with the arrangement until 2026 and there ain't a thing we can do about it unless we completely restructure that debt.

In 2002, Stormwater Services was moved to MWS from Public Works. At the time, the bride went to the alter without a revenue source. MWS could legally use money in the Water and Sewer extention and replacement fund to pay for stormwater services if those services related in some way to the sewer system. Sewers leak and if too much storm and ground water get in them, it can overtake the treatment plants. MWS also got a bit of money from the General Fund and from GO bond proceeds to pay for certain things that did not qualify for use of the E & R fund. Now, all that money is gone and there is little hope of additional funds from the general fund.

The fact that there is little money left usually moves people to scream about mismanagement. That is not the case here. The depletion of fund balances at Metro Water is a result of increased costs (Electricity up 34%, Treatment Chemicals up 151%, Plant and Building Security up 199%) and flat revenues. Average Operation and Maintenance expense for Water and Sewer (ex stormwater) has been 3.13% per year for 9 years. We have few, if any, other departments that can compare. That performance is due to aggressive cost cutting mostly in the form of reduced personnel. Basically, MWS did what most people want done - it cut costs before it asked for more money.

3. Large commercial users have a slightly lower volumetric rate but a much higher monthly minimum. It isn't the best rate structure because it does not encourage conservation. Frankly, I don't know why we have rate classification between commercial and residential. Water is water. There is a slightly lower marginal cost the more water we treat and sell, but it probably doesn't amount to too much. It is worth looking at sometimes. I can tell you that large users are not subsidized by small residential users. If anything, it is the other way around.

4. Yes, the current director of water services is quite good. He has a pretty good staff of dedicated and energetic people. I do hear complaints about customer service and I hope to spend some time learning about the concerns and solutions soon. I'll let you know what I find out.

Hope that answers your questions.

Whiskey's for drinkin' but water's for fightin'.

Even though Mark Twain said that a century ago, Georgia appears to think it still true. So, they have suggested we redraw our mutual boundary so they get more of the Tennessee River. This is the City that failed to replace, improve and maintain its water and sewer infrastructure to such an extent that in the 1990's it was falling apart. Their inattention, craven lack of planning and investment led to a system that was polluting the Chattahoochie River. They paid almost $38 million in fines, were sued by Upper Chattahoochie Riverkeeper, The State of Georgia and the US Department of Justice. Total bill just to bring the system up to standard was about $3.9 billion with a b, not counting the costs associated with a building moratorium and the loss of federal road money.

You would have thought that Atlanta would have treated the little Chattahoochie a bit more nicely since a big chunk of Georgia's population depends on it to live. You would also have thought that they would have first encouraged and then imposed water use restrictions long before Lakes Lanier and Alltoona, their main reservoirs, turned into mud puddles. You would have thought before they allowed construction of all those houses with rain domes and jacuzzi's that they would have considered their ability to provide water to them. It wasn't until 2004 that they adopted a rate schedule that actually encouraged conservation of water.

After all that bad behavior, they think they should be rewarded with a nice new chunk of Tennessee. To which I say: fat chance.