It’s not yet set in stone, but the San Antonio Water System (SAWS) is one step closer to implementing a new tiered rate structure aimed at promoting more water conservation, especially among high-end users.
The public utility’s Rate Advisory Committee (RAC) unanimously approved all rate structure recommendations on Tuesday, which along with a report, is available for public review and headed to the SAWS board for a vote. Chief among the recommendations is moving pricing from the current four-tier system to eight tiers for residential customers.
This change, SAWS officials say, would broaden the price distinction between low- and high-use commercial customers, and permit sewer/wastewater fees to reflect actual use. The city’s most water-conscious users would see their monthly bills decline.
The SAWS Board of Trustees, then City Council, will take up the recommendations later this summer and into the fall. The appointed 17-member committee, with support from SAWS staff and consulting firm Black and Veatch, developed the proposed new structure over the last year.
Less than half of the city’s residential customers will see a drop in their monthly water bill while customers consuming more water for lawn irrigation, swimming pools, or washing vehicles will pay more.
Presently, the first 5,985 gallons for residential customers are priced at $0.23 per 100 gallons; the price rises after that over the next three tiers. The new structure would set a new first tier price, $0.13, at 2,992 gallons and create eight tiers or “blocks.” Customers using less than 2,992 gallons would get a discounted availability charge, which is the minimum amount that SAWS charges for fixed costs.
Mary Bailey, SAWS vice president of Business Planning and Controller, previously said about 64% of customers fall into the current “Block 1,” paying the lowest rate. If the SAWS Board and City Council were to adopt the present recommendations, about 38% of customers would fall into the new block 1. SAWS tags the new Block 1 a “lifeline rate,” a basic amount of water needed for an average family of two to survive.
Commercial rates begin at a rate based upon the previous year’s monthly average use and would continue to do so under the proposed rates. The difference here is that users in would be charged less, and users in Block 4 would be charged more.
SAWS officials and RAC members say they spent much time working towards a new rate structure that would not adversely affect low-income customers. SAWS promotes an affordability discount, free water-efficient fixtures, and WaterSaver landscaping coupons and consultations to help low-income customers close the gap through conservation.
But critics of the proposed new rate structure say because low-income residents live in older homes with suspect plumbing, many such individuals still may not be able to attain the desired conservation use benchmarks. Other critics said the other sectors of water users are not shouldering enough of new structure’s potential impacts.
Meredith McGuire was one of four people at the committee’s meeting Tuesday to address the study and recommendations. The sociology and anthropology professor from Trinity University said SAWS’ rate-structuring process has failed to achieve the organization’s goals, such as setting a strong incentive to encourage water efficiency and conservation.
McGuire said SAWS must expect much more water efficiency and conservation from business, industry and institutional sectors.
“Tiered rates create incentives for businesses to make that investment, but they work only if the ceiling volume for the lowest rate is significantly lower than the status quo,” she added.
McGuire continued expressing concern about how the new rate structure could affect lower-income residential users.
“In a city where the median household income is low and has been fairly stagnant in recent years, residents should not be subject to regressive fixed charges,” McGuire said.
“Rather, business, industrial and institutional users must shoulder the burden because they can raise their charges to customers, but residents can’t just raise their incomes.”
Ellen Berky, Paul Pipkin and Jack Finger all said the committee has not fully, adequately taken into account the projected rate increases accompanying the development of the Vista Ridge project.
Council unanimously approved the $3.4 billion Vista Ridge contract last October, giving way to a 30-year pipeline and water purchase deal that will add 50,000 acre-feet of water to San Antonio’s supply from Burleson County/Carrizo Aquifer every year starting in 2020. Berky added that the draft study supporting the rate restructure is flawed.
“Not only does the draft misrepresent our existing SAWS residential rate structure, it fails to detail the impact of predicted rate jumps in 2016, 2017, 2018, 2019 and 2020,” Berky, an architect by trade, said.
Pipkin said he felt the consultants did “not seem to have analyzed the economic effects of water and sewer rate increases in cities where people are using less than 100 gallons of water per day.”
“Recently, I learned from SAWS that per capita water use in our inner city is less than 45 gallons per day while the more affluent and newer suburban households average 120 gallons per day per person,” he added.
Finger was more direct in his criticism. He said if users in certain blocks in the new structure are going to end up paying more anyway down the line, that did not feel like a “reward” for living in a city where officials have expressed pride in long-term water conservation efforts.
“Are you people crazy?” Finger added. Many would ask Finger, a perpetual gadfly at public meetings, the same question.
Following a presentation by Bailey on Tuesday, several committee members asked for clarification on some aspects of the proposed rate restructuring. But RAC members said they appreciated the work that has been put into the report and the recommendations.
Committee member Michael Moore suggested that SAWS undertake a public education campaign so customers are not misled to believe an automatic rate increase or decrease is in the works.
“It should be made clear we’re not raising rates, we’re changing the methodology of setting the rates,” he added.
Committee member Manuel Pelaez-Prado said San Antonio’s growth and diversification necessitates more updates to its infrastructure. A larger, multi-tiered rate structure could help SAWS to address this growth.
“The idea is we’re trying to raise the rate structure to market reality,” he added.
Bailey said SAWS will brief the Board of Trustees, council and have community meetings.
“We want to reach out to as many people as possible,” she added.
At committee member Ken Lawrence’s behest, SAWS should prepare ways for customers who seek it the help needed to adjust to the new rate structure, particularly low-income water users.
“This is the end of one process and the beginning of a whole other process where tweaks and minor changes may be made,” said Doug Evanson, SAWS’ Chief Financial Officer and Senior Vice President. Bailey added that, barring direction to the contrary from council or SAWS board, any changes to the proposed restructure would regard only verbiage.
Committee Chair Carroll Jackson said after the meeting he was “shockingly impressed” with the way things unfolded prior to his panel approving the recommendations unanimously without changes.
The committee original set out to finish forming the recommendations within one year, but it extended its work by another six months to accommodate SAWS hammering out the Vista Ridge agreement.
“But nobody on the committee was concerned about the length of time. Everyone stayed with the entire process,” Jackson said.
Jackson acknowledged there was the potential for disagreements, given the size and composition of the RAC, with members representing different constituencies around town.
“We all agreed that it was fine to disagree but to respect everyone’s opinions,” Jackson explained. At the meeting, Jackson suggested that the committee vote up or down on the entire length of recommendations or separately if there were significant concerns on any specific recommendation.
“In the end, everybody was on the same page. We didn’t have to vote a second time as there was a unanimous vote the first time,” Jackson said. “The credit there goes to Mary Bailey and Doug Evanson and SAWS staff. They did a phenomenal job providing us with the information we needed.”
As for any concerns that the new rate structure may adversely affect low-income residents, Jackson said the study and recommendations show no such impact for those users. He added the affordability discount, among other applicable tools, can help those customers save money and conserve water.
“We note the importance of providing that lifeline to this portion of the population,” Jackson said. “It was also important not to impede economic development in this city.”