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Austin Water proposes additional fee for utility bills

Thursday, April 28, 2011 by Michael Kanin

Austin Water Utility Director Greg Meszaros is calling for both a water rate hike and the institution of a new fixed fee for the city’s utility rate payers. In a presentation to the City Council on Wednesday, he said the new sources of revenue would help the utility balance out lower revenues which come thanks to a successful conservation program.


“We’re forecasting water revenues will be about $19 million below what we had thought previously,” he said. “Predominantly, that’s a conservation phenomenon.”


Meszaros called for a 6.7 percent increase in the city’s water rates and a 3.8 percent hike in the wastewater fee. Together, those figures would amount to an overall water bill increase of 5.2 percent.


The new fixed fee is what the utility calls a sustainability fee. As proposed by Meszaros, it would cost most Austin Water ratepayers an extra $4.40 a month. It would, however, be scalable, and more voluminous customers would see a higher impact from the new charge.


Meszaros told Council members that the sustainability fee would help his department balance out the volatility that they’ve seen. “By raising this new fixed fee, we’re able to keep the actual rate percentage down,” he said. “So it isn’t like new money. It’s just money that’s less volatile, I would say. This is more money that is guaranteed and it’s not really dependent whether it’s rainy or sunny, how effective conservation is or not.” 


Mayor Lee Leffingwell supported the idea. “I really like the concept,” he told Meszaros, “I’m surprised that we haven’t thought of it before.”


Leffingwell added that the fee “assigns a cost to functions that the water utility is currently performing that are not really core water and wastewater functions.” Here, he specifically cited the utility’s operation of the Wildlands Division.


Mayor Pro Tem Mike Martinez wondered if the fee would expose the city to legal dangers, should the utility face a rate challenge. Meszaros told Martinez that he felt the fee would be defensible.


“The numbers are real – it’s justified,” Meszaros said. “And by implementing it based on your meter size, that’s a cost of service type implementation, which is the standard you need to meet.”


But Council Member Chris Riley had some concerns about the fee. He suggested that the extra efforts that Leffingwell referenced “are unrelated to the utility’s core functions.”


“Built into the sustainability fee are estimates about conservation operations and that spills over into just the basic … revenue of the utility,” he said. “To me what this is most closely comparable to is what we’re talking about with the electric utility.”


Riley was referencing a proposed hike in Austin Energy’s customer charge (see In Fact Daily, April 27).


Council Member Laura Morrison suggested that the water utility should also consider including any losses it takes from its reclaimed water delivery into the sustainability fee. She also expressed concerns along the lines of those expressed by Council Member Bill Spelman in relation to Austin Energy’s customer charge.


“As we discussed yesterday, we need to be really careful because once we start putting in fixed costs, you’re going to disincentive-ize conservation,” she said.


The potential Austin Water hike is expected to be one of several rate increases that Austinites will face in 2012. According to a slide furnished by the city’s financial department, the bulk of those charges are projected to come from the water utility (at an average household increase of $7.93 a month) and Austin Energy (at an average household increase of $10.91 a month).

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