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Committee debates options for rate increase for water customers

Friday, May 9, 2014 by Kara Nuzback

Leaders at Austin Water Utility are pushing back on the recommendations of a committee tasked with finding alternatives to a water rate increase of more than 10 percent.

 

The Joint Committee on Austin Water Utility’s Financial Plan met May 7 to discuss a possible rate increase for customers caused by the city’s drought. Water utility officials say the city is currently in drought response Stage 2, meaning the Highland Lakes are at 36 percent, and conditions are expected to get worse as the summer months take hold.

 

The utility expects its average customer to see a rate increase of 14.8 percent next year. In other words, an $81 water utility bill would rise to about $93. David Anders, assistant director of business support services at the water utility, said that forecast could change by July.

 

As customers are using less water, the utility is losing money, but its debt service and operational requirements will stay the same. The joint committee, made up of members of the Water and Wastewater Commission, the Resource Management Commission and the Impact Fee Advisory Committee, was formed to explore alternatives to a drastic rate increase for utility customers.

 

Committee Chair Mickey Fishbeck said the group must take a recommendation to Austin City Council in three weeks, and council would not likely support a rate increase higher than 10 percent.

 

“I just think that’s hard to sell,” she said.

 

Anders presented several budget forecast options to the committee. He said the utility predicts consumers will use 40 billion gallons of water in 2015.

 

Two of the budget forecast options assumed 40 billion was an overestimation and cut the prediction by 2 billion gallons. Those options further proposed a 24 percent rate increase in 2015, which would allow the utility to maintain normal operations and pay its debt service.

 

Fishbeck suggested the utility assume customers would use 2 billion fewer gallons of water, but asked that the utility cut its predicted rate increase to 8 percent. She said the utility could cut personnel costs by refusing to fill open positions after an employee retires, quits or is fired from the utility.

 

AWU Director Greg Meszaros said Fishbeck’s target was unrealistic. He said to reduce the rate increase to 8 percent, the utility would have to lay off hundreds of employees because most other operational costs, such as electric and chemicals to treat the water, are fixed.

 

“We can’t reduce power. We can’t reduce chemicals,” he said.

 

Committee Member Brian Rodgers said the utility should “put the baby in the road,” and create a budget plan that includes a rate increase of only 8 percent and show how many layoffs would be necessary. Seeing the impact of the reduced rate increase might make the higher increase easier for council to swallow, he said.

 

Committee Member Luke Metzger said he was against making drastic cuts to the utility’s operating budget. Instead, he said, the city should educate the public about why the increase is necessary.

 

The committee is scheduled to meet again in two weeks. Meszaros said staff would attend the next meeting with predicted scenarios for varying degrees of rate increases.

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