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The Town Manager has determined that water rates must be increased in order to generate additional revenues of about $170,000 needed to maintain the water system, but the proposed rate increases in his August 1, 2012 package to the Board of Selectmen will do nothing to address the current inequities between residential and commercial rates. These inequities should be obvious to anyone who looks at the current rate structure.
Except for the first 5,000 gallons per quarter included in the minimum charge, the current water rates for all additional consumption are substantially higher for residential users than they are for commercial. For example, for every additional 1,000 gallons over 25,000 gallons consumed residentially, the water rate is $6.00 per thousand, up to 50,000 gallons, and $7.75 per thousand over 50,000 gallons. Meanwhile, the comparable commercial water rates are only $2.50 per thousand between 25,000 and 50,000 gallons, and only $3.50 per thousand above 50,000 gallons. Thus residential rates for these consumption ranges are over 140% and 120% higher than for corresponding commercial ranges.
For examples of quarterly bills, download the PDF at the link below.
Looked at another way, while a residential user currently pays $6.00 for every 1,000 gallons above 25,000 gallons, and $7.75 for every 1,000 gallons above 50,000 gallons, the highest current rate for a commercial user is only $3.50. There are dozens of commercial users that consume over 100,000 gallons per quarter, yet they still pay only $3.50 per thousand for this additional consumption. These low commercial rates certainly do not encourage conservation.
The Town Manager tries to justify these disparities, but his arguments are weak compared to the basic inequity inherent in these rates. In mid-August I expressed my general concerns to the Town Manager, and on August 28 I met with him to discuss alternative rate schedules. He agreed to develop rate scenarios showing the effect of increasing commercial rates more substantially. However, at the August 28 Selectmen's meeting where this subject was discussed, no alternative rate scenarios were presented. Note that this is not the first time I have raised this issue. When water rates were last increased in 2008, I also communicated this same issue to town officials, but they made no effort to reduce these disparities.
Instead of raising residential as well as commercial water rates to generate the additional $170,000 revenue needed, the town could raise only the commercial rates sufficient to generate the needed amount. One example would be to increase commercial rates for consumption levels greater than 50,000 gallons from $3.50 to $5.50 per 1,000. At current consumption levels, this would generate additional revenue of about $225,000. In addition, increase commercial rates for consumption levels from 5,001 - 50,000 gallons from $2.50 to $4.00 per 1,000. At current consumption levels, this would generate additional revenue of about $25,000. Adjusting for expected lower consumption levels (72%) resulting from these higher rates, the net additional revenue would be about $180,000, which is more than the $170,000 in additional revenue that the Town Manager says he needs to generate. And note that these commercial rates would still be substantially lower than residential rates at all levels above 25,000 gallons.
There was no publicity or request for public comment on this issue prior to the recent Board meeting of August 28, and hardly any since. The public hearing date of September 11 announced at that meeting leaves hardly any time for concerned residents to review all of the rates and the revenues generated at the various consumption levels, understand the issues, and be prepared for the hearing. Do town officials care only about raising water revenues, and not about having a full public debate on how to make the water rate structure more equitable for residential users?
I believe that town officials should defer a decision on water rate increases until other scenarios that make the rates more equitable have had a full and public discussion.
John Lukach, Shrewsbury
Attached: Water rates (water.pdf)