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New study recommends water rate changes
Published October 30, 2009
The city should reduce the amount of water it gives to its customers and raise a portion of its water rates.
Those are the recommendations of a “cost of service and rate design study” the Del Rio City Council received during its regular meeting Tuesday night.
Nelisa Heddin, vice president of the Austin company Water Resources Management, presented the results of the study to the council.
Heddin began her presentation with a quote from Benjamin Franklin: “When the well is dry, we learn the worth of water,” and said she believed Franklin's words were “so indicative of the water utility industry today, because we're seeing that well literally run dry.”
“I think we as a society have come to undervalue water,” Heddin said. “Just ask yourself these questions: How many people are guilty of turning on the faucet in the morning and letting that water go right down the drain while we wait for the water to heat up? How many of us turn on the faucet, letting water go straight down the drain while we're loading the dishwasher or brushing our teeth? These are all symptoms of our inherent undervaluation of water. How many people go to the gas station and take that nozzle and run a couple gallons of gasoline on the ground, so that what we put in our car is fresh?”
Heddin reminded the council that water and wastewater are critical building blocks for communities and that “water is literally the only commodity we can't live without.”
“I bring this to your attention because we have such an interesting dichotomy as managers of a water and wastewater utility. We have a service that is so undervalued we literally pour it down the drain, but it's so important to our survival that we can't live without it. And sooner or later, we have to shift that dichotomy and help our community understand and appreciate water and understand its value,” she said.
Heddin reviewed the steps her company took in preparing the rate study.
She said the company reviewed the amount of money the city needs to make from its water and wastewater system every year “to make ends meet.”
She said the second step of the study was a customer usage analysis, which looks at how customers of the city's water and wastewater system use water.
She noted that the water and wastewater system is built to accommodate periods of peak demand, even if that extra capacity is rarely used. Heddin said this portion of the study also dealt with different types of water system customers and the way those customers use water.
Rates should be designed in such a way that the customers who use water, pay for water.
For Del Rio, Heddin said, the rates charged by the city should include considerations of the costs of operating and maintaining the water and wastewater system, inflation, annual debt service and planned capital improvements.
Heddin explained that the bill for Del Rio water and wastewater customers is divided into two parts: a minimum bill and a volumetric rate.
“For the city of Del Rio, we are recommending at this point leaving your minimum bill at the currently adopted level, which is based on meter size, starting at $8.90 for your three-quarter inch meter, which is what most of your residential customers have,” Heddin said.
However, Heddin said her company is recommending a change to the gallons included in the minimum bill. She said the city's minimum bill currently includes 3,000 gallons of water.
“If I only use 3,000 gallons, I only pay $8.90,” Heddin said.
She said the company is recommending that the city decrease the number of gallons included in the minimum bill from 3,000 to 2,000 in 2010.
Heddin also recommended that in 2014, when the city expects to incur more debt for the water and wastewater system, that a second decrease be considered.
That decrease, she said, would bring the number of gallons included in the minimum bill from 2,000 to 1,000.
“We make this recommendation for several reasons. The first reason, on a water conservation standpoint, when we give water to our customers, it doesn't exactly encourage them to use it wisely. If I pay $8.90, what difference does it make if I use 1,000 gallons or 3,000 gallons? It's the same bill, so from a water conservation standpoint, the industry is moving toward charging customers for consumption,” Heddin said.
“The second reason is that a large proportion of your (the city's) costs are there regardless of whether or not Joe Smith uses 1,000 gallons or 10,000 gallons. The city of Del Rio has a cost: You've got this debt for your utility, you've got personnel that have to be in place. Most of your costs are fixed,” she added.
Heddin said the study also addressed the volumetric rate charged by the city. The volumetric rate is the rate charged by the city for water used above the 3,000-gallon minimum.
The current volumetric rate is $2.77 per 1,000 gallons for usage above the 3,000-gallon mark.
We are recommending to increase that to $3.04 per 1,000 gallons.
Heddin said the average impact the recommended rate increase would have a $4.12 impact to the average customer who uses 7,000 gallons, the citywide average for Del Rioans.
Saturday: Wastewater rate recommendations and council members' concerns
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