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Friday, April 26, 2019

OPINION - Why I Believe Higher Rates Now Will Save Us Money Later

by Neil Richard

When my wife and I moved to our current house, one of the major selling points for us was that we would be on "city" water. Our previous house had a water system that was reliable but not as reliable as we wanted. Our previous house was located in a rural area off Round Hill Road and we would frequently be subject to power outages. Without power, we didn't have water to flush toilets or wash hands. This meant that anytime we saw thunderstorms in the forecast, we would fill a bathtub just in case we wanted to flush the toilet. On top of this, our house needed a small pressurized pump to give us adequate water pressure and a filtering system to remove most of the minerals coming from the well.

Once we moved into our current home, we realized that our "city" water from the Service Authority wasn't as great as we had originally thought. The pressure coming into the house was frequently above the recommended levels for our plumbing appliances and we would occasionally see sediment in our toilet tanks.

I'll spare you the details but things came to a head when our neighborhood pool was filled for the summer season with green water. Upon checking the water in our house, and having our neighbors do the same, we realized it wasn't a problem with the pool but rather a problem with the water supply. Although the Service Authority agreed to test our water supply, and they did, we never really heard what the cause of the green water was, although we do have theories.

The end result of our experience with the Service Authority was that management was removed and we earned the nickname of "the green water people." We have also installed multiple leak alarms in our house as well as a Pressure Control Valve (PCV). We also review every bill to ensure there are no anomalies.

It was the constant reviews of our bill that lead me to eventually support the proposed Service Authority rate increase for the coming year. After volunteering to be a part of the Citizen Budget Advisory Committee, I was included in the multiple budget work sessions and offered a chance to give my opinion on many topics. To be honest, the picture isn't pretty. The system is old and was under-maintained and underfunded for years, if not decades.

Will a ten percent (10%) increase in rates next year solve the problem? No. Absolutely not. Will it serve us better than an eight percent (8%) increase next year? Yes. In the long run it will. Because the increases in rates will compound over time, the higher increase in rates earlier in the five year plan sets the Service Authority up for success. And it reduces the chances of failure.

To say this another way, and to give data as evidence, Draper Aden reported that since 2008, water rates have increased about 3.8% per year. That means that since we moved into our house in 2014, our water rate per thousand gallons should have gone from $4.53 to $5.08. Instead, it's at $4.53. In fact, things get worse when you see that our rates last year were higher, $4.92 per thousand gallons, than they are this year. That means the Service Authority lost ground on revenue. That directly impacts how much funding is available for repairs and maintenance. And we've already established that the Service Authority is far behind where it should be in those departments.

As I've become more and more educated on the water and waste water industry over the past few years, I continue to see news about other localities, both regionally and nationally, struggling with similar issues. Many government run water and waste water systems across the country are facing many of the same rate increases.

Now, before you start saying it should be run by a private entity, please remember there are risks involved with that. While I think it's a bad business decision to buy the Service Authority, I'm not in the water and sewer business so I don't know what the return on investment would look like. But I do know that another local water supplier charges $5.07 per thousand gallons right now. Even with a ten percent increase next year, our water rates would be cheaper than this private company. Yes, our rates may be high but they could be higher. Yes, we have high rates compared to the rest of the state, but 26 entities out of the 147 that responded to Draper Aden had higher rates than we do.

The bottom line for me is, the grass may look greener on the other side but it's only because it costs more money to keep it green. I'd rather keep things local where my voice matters. Even if that means I need to pay more in the coming years. I long ago predicted that the Service Authority would need to raise rates three out of the upcoming five years but I never thought it would need to be five out of the next five years. Maybe, just maybe, this will be the light at the end of the tunnel that we need.

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