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Water Utility delays implementation of new rate structure

Thursday, March 5, 2009 by Bill McCann

Citing complications with billing and the current economic climate, Austin Water Utility officials plan to delay rates designed to curb excess water use by commercial and multi-family customers by at least another two years.


Residential customers already have in place a conservation rate structure, in which the more water that is used over specific amounts the higher the rates.


The water utility is working on new water rates for all classes of customers (residential, commercial, multi-family, wholesale and industrial), based on the cost to serve them. The new rates are likely to result in increases for residential customers because studies have shown that other customers subsidize residential water users to varying degrees. Water utility officials said the new rates will continue the effort begun in 1992 to move residential ratepayers closer to paying the actual cost to serve them.


Initially the water utility planned to have the new rate structure, including excess-use rates, in effect in November 2008 following a detailed study and subsequent City Council approval. But the schedule slipped to April 2009 and will slip again. In an update e-mailed last week to individuals involved in the effort, water utility officials said they now plan to have draft rates ready for public review this spring and for the council to take final action as part of the next budget cycle. The rates would take effect in November 2009. 


The e-mail, from Michael Castillo, utility financial manager, and Rusty Cobern, utility budget and financial manager, on behalf of the water utility’s executive team, also stated that the excess-use rates would not be included in the November schedule. Castillo told In Fact Daily that implementing the excess-use rates could take an additional two or three years.


The delay will give staff time to conduct an education and outreach program because the excess-use rates will be complex and a significant change from the current structure, Castillo said. And it will allow the new rates to be incorporated into a new utility billing system now being developed, he said. The delay also will help allow affected commercial and multi-family customers to “get past the uncertainty and financial challenges of the current economic climate,” he added.


“Please do not interpret this delay as an unwillingness to comply with the Citizens’ Water Conservation Task Force recommendations,” Castillo and Cobern said in the e-mail. “The Utility’s Executive Team still supports moving to an Excess Use Rate design… once the timing is right and a comprehensive public involvement process is undertaken.”    


Cost-of-service rates and excess-use rates were among a long list of recommendations in a report by the Water Conservation Task Force established by the City Council in August 2006. Comprised of three council members and four board and commission members, the task force was assigned to develop initiatives to reduce peak water use by 1 percent annually for 10 years. The council adopted the task force report in May 2007. The water utility contracted with Red Oak Consulting in November 2007 to help develop new rates.


The e-mail from Castillo and Cobern drew immediate response from Bill Bunch, executive director of the Save our Springs Alliance, which was been campaigning against the city’s planned Water Treatment Plant 4. Bunch argues that the plant could be delayed indefinitely – saving ratepayers in the long run – by a combination of actions, including higher rates for water wasters responsible for the spikes in summer peak use. 


Bunch said he was troubled by delays in imposing effective rates for water wasters and by the utility’s failure to take quick, simple steps that could have a significant effect on water use. He cited a recent story in the New York Times concerning the success of a concept aimed at getting people to reduce energy or water use by including on bills information on how they compare with other users, including neighbors. 


“Social pressure has shown to be effective in getting people to use less energy or water,” Bunch said. “The city has the capability to do this now and could have done it already. They keep saying they will do it, but they never say when.”

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