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Proposed water utility ‘sustainability’ fee draws public criticism

Friday, September 2, 2011 by Josh Rosenblatt

A little more than a week away from the start of their official deliberations on the proposed FY2012 budget, City Council members spent Wednesday afternoon hearing from some of their constituents on the matter, and one thing was made very clear: They were not happy with the idea of an Austin Water Utility rate increase.

 

The proposed rate hike will consist of two parts: a traditional cost-per-gallon charge for monthly water and wastewater service and a new fee—called variously the water sustainability fee, which will be a fixed charge based on the size of a customer’s meter, regardless of how much water that customer actually uses. On average, the typical utility costumer will pay an additional $8.33 each month.

 

According to the city Budget Department, the “sustainability fee” is necessary to “confront the consequences of a trend toward reduced consumption driven by the economic climate and the success of conservation efforts.” Since 80 percent of the utility’s costs are fixed and the amount of revenue it takes in is so volatile, the fee will provide stability “while creating a devoted funding stream for the Utility’s environmental sustainability efforts, including water conservation, reclaimed water service and infrastructure, and wildlands management,” according to the proposed budget.

 

Budget Officer Ed Van Eenoo told In Fact Daily that the charge should really be considered a “revenue stability fee,” a way for the utility to balance out both natural fluctuations in the market and new economic and environmental realities.

 

“Austin Water Utility is a highly fixed-cost operation,” said Van Eenoo. “So, whether they’re selling a lot of water or very little water, most of their costs are fixed, whereas most of their revenues are volumetric. When a lot of water is being sold, they generate more revenue; when little water is being sold, they generate less revenue. The revenue-stability fee was designed to establish a fixed component to the fee structure.”

 

Members of the environmental advocacy community spoke less highly of the proposed fee yesterday. Bill Bunch, executive director of the Save Our Springs Alliance, called it a “shamefully unfair and unjust” component of a “climate-denier budget.”

 

Bunch said it is “contrary to conservation to load up those people using the least amount of water with a 66 percent hike on their bills, with those using the most seeing less than a 7 percent hike.” Neither the current rate structure nor the proposed new rate structure, Bunch said, is “steep enough to discourage people who are rich from wasting way too much water. It needs to be a lot steeper.”

 

David Foster of Clean Water Action agreed with Bunch’s assessment, calling the fee “regressive,” a reference to tax structures that put a larger proportional burden on those with less money.

 

In FY1995-96, the Austin Water Utility pumped over 190 gallons per capita per day.  By FY2009-10, that number had decreased to less than 140 gallons. In FY 2011-12, the Austin Water Utility projects that the typical residential customer’s average monthly water usage will decrease by another 6.5 percent.

 

In addition to the water utility fee, the proposed FY2012 budget includes the first Austin Energy rate increase in 17 years and a hike in the property tax rate of 2.5 cents per $100 of taxable value. The proposed FY2012 budget totals $2.8 billion.

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