Consultants unveil new ways to charge for water

by Andrew Batten

A consultant working for Charlotte-Mecklenburg Utilities has introduced several new options for how the department could charge customers for water.

Red Oak Consulting has developed five options that could affect a variety of water users, from those using little to customers with larger families or customers who irrigate. The consultants presented the differing rate scenarios at a meeting of a citizen panel that is advising the utility department about how it charges for water. The stakeholder group includes homeowners as well as developers, the Catawba Riverkeeper and various commercial interests.

Charlotte-Mecklenburg’s existing rate structure divides water use into four tiers. As customers use more water, they move up those tiers, paying more and more per gallon of water.

The utility charges more per gallon to encourage conservation and to help pay for transporting the water to those users, who are typically irrigating, said George Beckwith, a member the utility’s standing Advisory Committee who also serves on the Stakeholder Advisory Group.

The utility also charges customers a $2.40 billing fee each month for both water and sewer as well as a separate sewer service fee – $4.31 per 748 gallons of water, up to 17,952 gallons.

Those rates brought in a little more than $240 million last year, and the consultants looked at variety of options that would bring in that much revenue and how each option would affect equity to all customers and encourage conservation.

The consultants present the following options for the utility’s consideration.

• Option 1: Add availability fee, lower tier rates.

This structure would add a fixed monthly availability fee that would vary by meter size. The bigger the meter, the higher the charge.

Under this scenario, high-volume users would pay slightly less than they pay now, and lower volume users would pay slightly more. That could help the utility since it would no longer be dependent on high-volume customers using a lot of water to support its bottom line. At the same time, those customers wouldn’t be encouraged to conserve water, the consultant said.

• Option 2: Adjust the sewer cap.

Under the current rate structure, customers pay for sewer service based on their water use. But the utility caps its sewer charge at 17,952 gallons.

Customers aren’t charged for sewer when they use more than that amount of water. But officials say customers using more than 12,000 gallons are usually irrigating and therefore paying for sewer service on water that never reaches the sewer system.

Lowering the cap to about 10,500 gallons would more accurately reflect the volume of water discharged into the sewer system, but the utility would need to increase the sewer rate to generate the same amount of revenue as the current structure.

The average customer would see an increase in their bills of less than $2, while the customers who use a lot of water would see their bills decrease.

• Option 3: Lower the lifeline (Tier 1) rate.

This option would lower the Tier 1 rate known as the Lifeline Rate, a subsidized rate which provides for basics needs. The utility would increase the rest of the tiers to recover the same amount of revenue as the current structure.While this option would improve affordability for customers who use the least amount of water, it would not change the conservation message or the utility’s financial stability.

• Option 4: Modify tiers for irrigation.

Customers who have a separate irrigation meter are charged a higher rate for that water – starting at the regular third tier, or $2.69 for 6,000 to 17,952 gallons. Under the fourth option the utility could encourage conservation by charging less if those meters have included conservation technology.

• Option 5: Adjust capacity fees.

Under the utility’s current fee structure, new residential customers pay a one-time $2,058 fee, which brought in $6.1 million last year. Increasing that capacity fee 50 percent could bring in an additional $3.2 million. Officials would then have the option of slightly lowering the water and sewer rates – and still recover the revenue. But relying on capacity fees would require economic development in the area to continue to grow, the consultants said.

The stakeholders group and utility officials have not taken a position on the consultant’s proposals.

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