Sunday, July 17, 2011

Problems with the Proposed Water Rate Hike

I did a simple analysis of the proposed rate increases for residential users from the agenda packet currently online. I noticed something very disturbing. The percent increase on the usage rate for the lower water users is dramatically higher than on the larger water users. The usage rate at the bottom rung increases by 129.7%, while at the highest rate increases by only 37.3%.

Back in 2007, when the city was considering its first base rate increase in almost a decade, the initial proposal was for a flat rate increase of $15 per meter. A lot of discussion and a quick analysis showed that that type of increase was not equitable and placed too much of the burden on those using the least water and those least likely to be able to afford such an increase. That was replaced with a series of tiered increases, where the smallest meter size got a much smaller increase than the large users with big meters. Doing a flat, $1.31, increase is also inequitable, and regressive. It puts a higher burden on the small water users, those actually conserving. It gives the big water users a quantity discount, which is exactly the opposite of what we need to be doing. A much better solution is to do a percentage increase on the current rates of around 60%. That would still bring in about the same revenue (I might be off in my estimates) and shift the increased costs of water more evenly and fairly across all the water users. What ever rate increase is finally adopted it needs to be a percentage increase, not a flat rate.

Just to be complete and fair, the increases proposed to the base rates are roughly 29% across the board. That is the right way to do a water rate increase. Now lets do the same thing to the usage rate increases.

Building Meter Current Rate Proposed Rate Proposed Increase Proposed
Fairer Increase Fairer Rate Fair % inc

% Increase

0–2,000 gallons $1.01 $2.32 $1.31 129.70%
$0.61 $1.62 60.40%
Next 3,000 gallons $2.15 $3.46 $1.31 60.93%
$1.30 $3.45 60.40%
Next 10,000 gallons $2.76 $4.07 $1.31 47.46%
$1.67 $4.43 60.40%
Next 50,000 gallons $3.06 $4.37 $1.31 42.81%
$1.85 $4.91 60.40%
Next 35,000 gallons $3.21 $4.52 $1.31 40.81%
$1.94 $5.15 60.40%
Next 100,000 gallons $3.51 $4.82 $1.31 37.32%
$2.12 $5.63 60.40%