MSD recently developed a proposal to increase customer wastewater rates to help fund more than $1 billion in needed wastewater system investments between July 1, 2012 and June 30, 2016.
MSD recently developed a proposal to increase customer wastewater rates to help fund more than $1 billion in needed wastewater system investments between July 1, 2012 and June 30, 2016. Stormwater rates would not be affected by the rate increase. MSD’s independent Rate Commission is currently reviewing the proposal. The proposal calls for voters to approve an additional $945 million in bonds to help fund wastewater infrastructure investments. Presuming voters approve this bond issue, the proposal suggests four annual wastewater rate increases ranging from $3.64 to $5.49 a month between July 1, 2012 and June 30, 2016. This means that, by July 1, 2015, the average single-family residential customer will pay $47.05 a month for wastewater services. That may sound like a lot. And it is. But it’s also much less than they would pay if voters reject the proposed bond issue. In that case, improvements will need to be funded entirely with customer fees. In that scenario, the average residential single-family bill would jump to 2.5 times its current level on July 1, 2012, with more modest increases each of the next three years. That translates into the average single-family residence paying $73.55 a month for wastewater services beginning July 1, 2012. We know that the increases we are proposing will still create a financial burden on our low-income, elderly, and disabled customers who live on fixed incomes. We do have assistance available for these customers – a 50% reduction in rates for those who qualify. But aren’t MSD customers already overcharged? The truth is, MSD customers have historically paid about the same or less than other people across the country for sewer services. Currently, the average single-family residential customer here pays $28.73 a month. According to a NACWA Service Charge study, that compares to a national average in 2010 of about $30 a month. In many cities, including Seattle and Atlanta, residents pay two to three times more. Our rates are lower by comparison because MSD has worked very hard to keep them low. In truth, they are artificially low. Taxpayers have supported our use of bonds to help fund construction, which has helped us make rate increases more manageable over the past decade. Consider for a minute what $28.73 a month actually buys. First, it buys you the comforts of indoor plumbing. Our customers can flush it and forget it, as we say. But wastewater – and that includes water from showers, sinks, everything – has to go somewhere. In this case, it enters a sewer pipe and is transported to one of our seven treatment plants, which together process an average of 330 million gallons of wastewater every day. These plants contain technologies that separate solids from liquids, remove harmful bacteria, and disinfect water before releasing it to waterways. That $28.73 a month also buys cleaner waterways for our region. It buys protection from the health and safety risks of water borne diseases. If you consider the alternative, we all get quite a lot for our wastewater dollar. Now consider what that $28.73 doesn’t buy. It doesn’t pay for all the updates and investments that our system badly needs to meet increasingly stringent state and federal regulatory requirements. The EPA may have helped to fund mandated improvements back in the 1970s. That is no longer the case. Today we are on our own. Much of our sewer system was built 100 years ago or more and it was designed to release sewage water into the environment. Over the years since our founding, we have fixed hundreds of places where wastewater overflows into local waterways during rainstorms. We still today have hundreds more of these overflows to fix. We have used bonds to fund most of the investments in our infrastructure since 2003. And we will likely need to use more bonds. But we cannot service this debt on the $28.73 customers typically pay. Despite the substantial progress that has been made, our region’s wastewater collection and treatment system is aging. We have more than 300 miles of sewers that were built before 1890. Another 524 miles are more than 80 years old. The state and federal regulatory requirements that govern these pipes and our seven treatment plants are growing increasingly stringent. MSD is currently completing the second phase of a multi-billion, multi-decade program to transform this aging system into a modern, efficient, and effective one that protects health and safety, supports economic development and meets future regulatory requirements. The problem: MSD’s current rates aren’t generating sufficient revenues to make these much-needed investments. Given the age and condition of our system, it means the community will face increased health and safety risks. Does it mean a cholera outbreak? Probably not. But it does increase the likelihood of raw sewage backing up in basements and backyards, and of accidental ingestion of contaminated wastewater found in our creeks and streams. It also means our region’s ability to attract economic development will be threatened. Clean water and a healthy environment are important to business and industry when they are choosing where to locate. Finally, it means that we our jeopardizing our regulatory compliance. In regulators’ eyes, maintaining the status quo is simply not an option. This rate proposal is the first step in a process that can take up to 165 days. Starting this week, the Rate Commission will host a series of public hearings, where the public will have the chance to comment on this proposal. Click here for the public hearing schedule. In October, the Rate Commission will consider all these comments and make a recommendation to MSD’s Board of Trustees. The Rate Commission may recommend approving the proposal as is, or they may create their own alternate plan. By December our Board will review the Rate Commission’s recommendation, and will introduce the rate plan. Presuming the plan includes the use of bonds, a bond authorization election can take place as early as April 2012 ballot. Following that election, MSD will be able to formally adopt its new rate plan. The first wastewater rate change will become effective on July 1, 2012.