Wednesday, April 27, 2011

CFPUA Rates: Cheaper To Water The Grass Than Take A Bath

Under the CFPUA's newest inclining rate scheme it will be cheaper for some families to water their grass than give their child a bath.

When the new rates go into affect in May it will be cheaper for some Cape Fear Public Utility Authority customers to give their child a bath in the front yard than inside their home. How can that be? Under the new rate structure, families that have a separate irrigation meter will pay a mere $2.64 per thousand gallons to water their grass. Those same families can pay rates of $3.96 to $5.28 for the water they use inside their home.

The lower irrigation meter rate was implemented as a last ditch effort to provide relief for families and homeowners under the pressure of skyrocketing water cost. Some board members also saw it as a way to encourage consumption, sell more water, and increase revenue. If the CFPUA can increase revenue, it could lead to lower rates for all customers.

In the end, this change will offer little relief, as most residential customers do not have separate irrigation meters. It may seem like a good deal now, but customers may want to think twice before running out and having a separate meter installed. While the irrigation meter rate will be $2.64 in May, it could easily be changed to $10.64 or more, if the board so desired. A gamble most customers are not be willing to take.

The question many people are asking is how can the CFPUA allow for the unlimited use of water for irrigation at the first tier price of $ 2.64 while punishing families with second and third tier pricing of up to $5.28 for essential household use? The answer is simple: There is no explanation.

The CFPUA’s inclining rate billing structure is inexplicable and sends a confusing message to customers. The irrigation meter rate is a just one symptom of a problem plagued rate scheme that few can justify. Fortunately for CFPUA customers, some board members continue to advocate for a uniform rate which would bring an end to a failed and unnecessary inclining rate structure that does more harm than good.

Sunday, April 24, 2011

CFPUA Retains Controversial Inclining Rate Structure in Spite of Public Outcry

Consultants and Board Members Warn of Adverse Consequences

This is the first in a series of articles explaining the adverse environmental and economic consequences of the Cape Fear Public Utility Authority’s newest inclining block rate billing structure.

The newly adopted Cape Fear Public Utility Authority rate structure is a giant step backwards. A tough pill for customers to swallow after spending $40,000 on consultants, which in the end resulted in little meaningful change for New Hanover County families. For some board members it seems the decision to do nothing was already made before consultants were ever hired.

In March the CFPUA held a public hearing specifically to address the rate issue and take public comment. CFPUA Board members noted at the time that a vast majority of public comments were in favor of changing to a uniform rate. Just one month later, at April’s CFPUA board meeting, a handful of board members chose to ignore public sentiment in favor of the status quo.

CFPUA Finance Committee members Gene Renzaglia, Burrows Smith, and City Councilman Ron Sparks strategically brought only one rate structure recommendation before the board. The three have been the most outspoken advocates of the current inclining block rate structure, defending it at every turn. To the dismay of some board members and even CFPUA staff, they recommended the same inclining block rate structure, with only slight adjustments to the tiers.

To counter the move, County Commissioner and CFPUA board member Rick Catlin put forth a motion to change back to a Uniform Rate. Board member Mike Brown quickly seconded. After much discussion, the motion nearly past with 5 members voting for it and 6 voting against.

When the Uniform Rate proposal failed, Catlin put forth a motion to raise the first tier to 18000 gallons, seeking some equity for larger families, acknowledging the proposed 12000 gallon tier was to low. City Councilman Ron Sparks was successful in persuading Catlin to withdraw his motion.

In the end, Renzaglia and Smith successfully defended the inclining block rate structure they helped put in place, in spite of public sentiment.

The rate structure that was finally approved adjusted the existing first tier from 9000 gallons bimonthly to 12000 gallons. According to the CFPUA consultants Utility Advisors' Network Inc., the 12000 gallon tier is the typical usage of a family with about 3 members, based on national averages. That leaves the average family of four or more that would typically use more than 12000 gallons paying the higher second tier rates.

Opponents point out that a first tier set at 12000 gallons represents the CFPUA’s continued endorsement of a policy of discrimination, knowingly punishing larger families with higher prices for their basic water needs. As with most inclining rate structures, it is fundamentally unfair and leaves the CFPUA board picking winners and losers, arbitrarily granting some customers a lower rate while charging others a premium.

Another concern was that the third tier price was raised to $5.29. Consultants warned the CFPUA Board Members that tier pricing set too high would lead to a decrease in revenue. Customers simply aren’t going to gouged where they have discretionary use, such as irrigation. They’ll turn it off or seek water from other sources such as wells. As irrigation revenue is lost, prices elsewhere would have to be raised to meet budgetary requirements. Ultimately lost revenue will lead to higher prices for all customers.

Wells are not something the CFPUA wants to see encouraged. Environmentalist and concerned board members alike have warned that more wells will only worsen the aquifer saltwater intrusion problem.

While the rate structure issue is far from settled, the five CFPUA board members that voted for the Uniform rate should be commended for putting politics and rhetoric aside. They were County Commissioner Brian Berger, Mike Brown, County Commissioner Rick Catlin, City Councilman Charlie Rivenbark and Cindee Wolf. They attempted to do what was in the best interest of new Hanover County Families and the long-term financial health of the Cape fear Public Utility Authority.