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Water Utility could lose $100 million if conservation effort succeeds

Friday, January 28, 2011 by Michael Kanin

The Austin Water Utility claims that meeting the city’s water conservation goals could sink its revenues, but that might only be a part of the problem the utility is facing.


In a report to Council yesterday, AWU predicted that it will lose between 18 and 24 percent of its income should the city’s proposed water conservation efforts be successful. Coupled with other predicted losses, the utility said it is looking at a total revenue decline of between 25 and 35 percent that would cost the utility $100 million a year by 2020.


AWU Director Greg Meszaros presented the numbers Thursday as part of a comprehensive report on steps that the utility will have to take in order to reach the conservation goal of reducing average daily usage from roughly 167 gallons per day to 140 by 2020. Meszaros said that if the plan is adopted as is, ratepayers could expect to make up a large chunk of the lost revenues, with the average bill going up by $9 or $10 a month.


“This is lost revenue,” he said. “This isn’t getting an additional $100 million for the utility, this is recovering the lost revenue over a 10-year period.” Meszaros said.


Mayor Lee Leffingwell, who served on the task force that created a series of water conservation guideline in 2007, was skeptical of several features of Meszaros’ plan. “Our guiding principals in that task force is that our efforts were going to be directed towards making water use more efficient and eliminating waste of water,” he said. “What we were not trying to do was change people’s lives … This, in certain aspects, seems to be a departure from that.”


He cited proposals in the 140gpd plan that would put limits on and mandate design review of irrigation systems. After the hearing he told In Fact Daily that he was skeptical of what it might take for the city to get down to that magic number. “As I mentioned from the dais, our philosophy in the past has always been to maximize our water efficiency and to eliminate waste but not to impose any required lifestyle changes on our citizens – at least not at this point in time,” he said.


“I was chair of the original Water Conservation Task force. I’m a strong believer, and I’ve supported these measures all along. I just don’t think we need to get carried away with some of the proposals that are contained as necessary to meet these goals.”


Of the changes that the utility suggests in its report, city review of irrigation designs, irrigation limits, and administrative enforcement of waste water violations are rated as the top three most effective new approaches as the city moves toward its gallons per day conservation goals.


But what is sure to catch the eye of most Austinites are the projected revenue losses – and the steps that the utility will need to take to correct them. In the report, Austin Water argues that a correction of this loss is key to its future health. “Whichever approach is ultimately implemented, it must ensure that Austin Water’s financial position remains strong,” it reads.


In his presentation, Meszaros outlined a handful of methods the utility could use to deal with its potential loss. These include an increase in rates, a fee that the utility is calling a “conservation rider” that would be assessed on a sliding scale depending on use, and an increase in other fees.


“I’m very skeptical of the cost,” added Leffingwell. “One-hundred million dollars a year by 2020 is something I don’t think we ought to impose on our citizens when we don’t have to.”


Still, Meszaros is confident that the 140gpd plan is sound. “Within reason, we could get to whatever number the Council directed us to over a certain number of years,” he said. “It’s just how much conservation you want to do and how significant you want to be in implementing that – and how much you may want to affect lifestyles and approaches.


“Yes, I’m confident that the task force recommendations … that our analysis and selection of (the) mix of measures would get us to 140, on average,” he added.


Council Members took no action after Meszaros’ presentation. Council Member Chris Riley, however, told Meszaros that he should take the plan to the Resource Management Commission.

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