It looks like the Director of PU is also recommending the city wait until the new updated billing system is in place before implementing the tiered rate billing the Council wants to have in place sooner rather than later. Looking at the justification it appears a reasonable recommendation given the current system has some capacity and stability issues. There is no specific recommendation on how that tiered billing will be implemented so until a proposal is on the table there is not much to address.

 

The Water Conservation Incentive initiative has merit (transferring $500,000 from the reuse water project surplus)but it  is really a drop in the bucket, so to speak, covering only 3500 toilet replacements on a base of 167,000+ residential dwellings. Also, I see the Sewer Nutrient Fee will increase by $200 to help fund this initiative which is really asking new customers to pay for existing customers to upgrade there home plumbing. Anyway, there are probably double that number of toilets (300,000) out there that are not up to current conservation standards so 3500 is a small number but it is a start. Of course, extra conservation measures are what  caused the budget shortfall so presumably being overly aggressive on an incentive plan would add to that issue if significant cost cutting measures are not likewise addressed. It seems to me customers could be rewarded with a 1 or 2 % billing reduction if their previous year's monthly usage was used as a baseline so that if the current matching month was less they could receive the reduction. This would help keep water conservation on everyone's mind and encourage all consumers to conserve to get the bonus on billing. Perhaps that should be worked into the new billing system as a capability similar to the type of bill we get from Progress Energy (although they do not offer a similar bonus but it is worth pursuing there as well).

 

There are a number of charts and summaries dealing with the relationship of Raleigh's water and sewer rates and connection fees compared to other municipalities. Water rates for Raleigh are in line with Charlotte, Fayetteville, Greensboro and Durham all of which are at the lower end of the scale and are larger towns like Raleigh. There are others that charge more but are smaller towns, many of which are dependent on Raleigh water. One thing you realize when looking at this comparison there are many different ways to justify the charges. You may recall in a recent N&O article on tiered water rates there was much confusion over what was the typical water usage per SF residential dwelling. The consultant stated 6000 gallons, the city said 6 ccf which is 4488 gallons and my own view was closer to 7000 gallons. The N&O had 6000 gallons in their Feb article on the subject. In any case, I notice that in the details of the comparison the base for SFR use is 250 GPD which equates to 7500 gallons per 30 day month. The city claims the average family unit is 2.5 people so that would translate to 100 GPD per person. Given most families are 3-4,  and some larger, the family of 4 would use 400 GPD and 12,000 gallons per month. A far cry from the 4488 that the city said was the average family usage and they would see no increase (in fact some decrease) in rates over the current billing approach.

 

Setting that aside for the moment and looking back at the various billing bases by municipality in the report you find billing for new connections based on pipe/meter size, or square feet of the building, or number of bedrooms in the dwelling, or per lot, or in the city versus outside the city, and water used at a variety of rates. Raleigh has an acreage ( explain that to an average citizen)fees for water and sewer separately, plus a meter connection fee and usage fees. Now they want to add something they call a "W/S Capacity Replacement Fee". The new "impact" fee would be based on the $10 per gallon ( no details justifying this number)and the 250 gallon per day average per dwelling(so on one hand Public Utilities acknowledges that 250 gallons per day or 7500 gallons per month is average for new connection capacity planning and yet in their proposal for tiered rates they say it is really 4488 gallons per month or 6ccf; go figure!). That that would be a total of $2500 per new connection; a 154% increase in connection fees over Y09 fees. Even without this new fee, the fees are being increased another 42% (on top of this year's 53%) due to the special $500 Water Nutrient fee and $200 Sewer Nutrient fee increases proposed for Y10.

 

The comparison of water rates based on Y09 numbers places Raleigh in the lower 3rd of rates along with Charlotte, Durham, Fayetteville and Greensboro. In looking at that picture it appears that initial connection fees based on higher fees for the larger users is allowing lower rates for the average SF users in other cities. This is similar to the telephone network principal that business customers with higher usage subsidized residential rates to keep service affordable for the average user.

 

Given the complexity and variety of billing methods I think it is time for Raleigh to select a method that is easy to understand and easily defended. I would clearly state that there is a need to replace and plan for additional capacity when new connections are made to the system. This is capacity replacement costs that need to be borne primarily by new users. They need to combine all the various fees into one fee for water and one for sewer and come up with a method to distribute costs based on the type of connection. For residential it should be the size of the connection/ meter (3/4" being typical of Residential)and so much per bathroom (or "sink" room). In truth bedrooms and square feet do not relate very well to water usage but bathrooms, kitchens and laundry rooms sure do. Then as the size of the connection is increased and the number of "sink" rooms increases the cost of the connection goes up. Wake Forest and Charlotte have done a good job of pipe size related fees and that makes sense to me. This would then be the new "impact" fees. Then the rates can be set with a sold base point say of 6000 gallons per SF dwelling as tier one and an incentive plan implemented with a bonus % for reducing water usage from last year to this year based on a monthly comparison. I think most people would understand the fees and be encouraged to conserve to reduce their costs. Beyond that the City needs to find ways to cut operating expenses (at least 10% in my opinion)and I have not seen any ideas put forward up to this point.

 

Finally, there is a need to educate the public on what the 17% increase will do, ie break it down in pieces help them understand why this level of increase is essential for the sound and stable management of this vital City service whiling maintaining our excellent bond rating.  With that explanation we need the cost management initiatives that go along with sharing the grief of higher bills.