The cost to turn on the tap is about to increase substantially for a quarter million water users in Western Massachusetts.
Earlier this year, the Springfield Water and Sewer Commission proposed a 16. 9 percent rate increase. After an outcry from several elected officials, the commission staff revised the suggested rate hike to 9.5 percent.
The proposed rate increase would take effect July 1st and the typical household’s combined water and sewer bill is estimated to increase by $8.86 per month.
WAMC’s Pioneer Valley Bureau Chief Paul Tuthill spoke with the commission’s executive director Joshua Schimmel.
As we were putting the finishing touches on our, our budget at the time in April, we started seeing a precipitous drop in water demand up at the water plant. And we're talking mid-April and we were in the middle of our billing cycle. So we really didn't know what customers were using or more importantly, not using water. We just knew that at the water plant, we were seeing a 20% drop in demand. So you know, our higher budget is based and predicated upon a predictive analysis of what the next year's revenues are going to be. We typically see a 2% decrease in usage each year. That is the trend, people are using less and less water, you know, updated fixtures or toilets and bathrooms use less water. So we see we see a reduction in usage each year, but not 15 to 20%. It's generally a 2% trend. So we saw the bottom drop out. We had to make some assumptions for the budget because we had an obligation, a statutory obligation, to publish the budget with an understanding that we would get more information and that we would be able to, you know, reassess, which is how we do it every year. And we applied some assumptions to our models and said, "Alright, this is where we are." And in order to fund ourselves appropriately and do the appropriate investment and responsible investment to be able to, to continue to provide reliable water and sewer service, we needed a 16.9% rate increase. Shortly after that was released, we got information back, our billing information- There's a difference between demand that we see at the plant and the actual billing, where you can tell who's using the water and who's not, and where those differences are. And so we were able to kind of analyze that data and say, "Hey, the projections look a little better and usage is back up to where it really should be." We have a better understanding of our customer classes. And you know, what those impacts came from, and kind of have a better understanding of what to expect.
But a 9 1/2 % increase is still, is still pretty substantial well above, obviously the rate of inflation. Why, why is water so expensive?
Yeah, I mean, I think water has been undervalued, and has been for a really long time. And it's been a really difficult haul for water utilities to raise rates, to match what the need for investment is. I mean, this goes back to 45-55 years ago, when the federal government supported water and waste, wastewater infrastructure with grants. Similar, you know, similar to many municipal budgets- And I have no expertise in municipal finance- But many municipalities have a lot of state and federal funding that supports their budgets, many of them, you know, only really raise 30 to 50% of their total budget is coming from revenues that they generate within the city with taxes and fees. And that's not the case for an independent water and sewer utility. We get virtually no federal and state grant funding, no regularly scheduled funding. We chase individual grants, we chase loans, but we're not subsidized in any way. For our budget, every penny that we get, we have to raise ourselves. We have a great deal of infrastructure, 1000 miles of pipeline with water and sewer, and 25% of the water and 25% of the wastewater pipelines are 100 years or older. So there aren't many industries, globally, whose backbone relies on infrastructure, that's, you know, 75- 150 years old. It's expensive infrastructure to maintain, it's expensive infrastructure to replace.
So, the bulk of this increase is needed for infrastructure work. It's not for, it's not for salaries, and operations, and overhead and things like that? It's for, it's for infrastructure work?
It's all rolled into our operating costs. But you know, we've we've gone through the, you know, the standard measures that we do every year for kind of reducing the budget and reducing things. And this year in particular, with the COVID impacts and our sensitivity to the communities that we serve. Obviously, you know, we've we've eliminated, we've done hiring freezes, we've eliminated vacancies, we've flattened out, there's no COLA increases for any staff this year. So I mean, we've taken pretty drastic measures, and appropriate measures for the times to reduce the budget. But the one place where we we can't reduce is in our ability to be able to provide water and wastewater service, and so there are some fixed costs that just do not go away. And we need to be able to meet those costs.
And you've put some programs in place to assist ratepayers who may, who may struggle with this increase. Can you explain some of those?
Early on in March, at the March board meeting, the commission voted to suspend all water shutoffs. We've voted to suspend late fees and penalties for non-payment, pretty important stuff, in the middle of a crisis. But we were- Early on, we recognized that, and said, "We can't be doing this." So, you know, before the governor said, "There’s no utility shutoffs and no evictions", we had already voted into suspend late fees and shut offs, etc. So that was the first piece, and we also voted to extend more generous terms for for payback period. So, we already have a pretty decent program in place for people with financial hardship, where they can do a payment plan, in certain certain terms. And if they meet those terms, we'll give them a period of time to pay that back. So we've kind of extended those terms a little bit longer, back in March, with an understanding, you know, of the impacts of COVID. But then additionally, we began a program, a customer assistance program, to support folks with financial hardship, to give them a credit, a one-time credit, similar to like a LIHEAP or a fuel assistance program. The basis for this would be: It'd be first come, first serve. It'd be for single, single family owner-occupied homes, and they'd be eligible for $125, one-time credit, annually. And we're going to be able to probably push that out to about 4500 homes. So it's going to cover a big portion of those folks that, from an income basis, annually income basis, are going to be challenged to pay that bill. We've always had a senior/disabled discount of $33, but we've now increased that to $75. And the commission voted on that back in May as well.