Title
Wastewater Volume Based Billing Proposal
Recommended Action
UAC Deliverable:
Review and provide input
Report
Issue:
The 2013 Wastewater Management Plan as adopted by City Council supports further evaluation of the potential for volume-based wastewater utility rates for residential customers. Currently, residential wastewater customers pay a flat rate.
Staff Contact:
Andy Haub, P.E., Director of Water Resources, 360.570.3795
Diane Utter, P.E., Water Resources Engineer, 360.753.8562
Background and Analysis:
The Utility Advisory Committee initiated a discussion of the potential for volume-based wastewater rates as part of developing the 2013 Wastewater Management Plan. Subsequently, City Council adopted the Plan including the following goal, objective, and strategy:
3A. Objective: In concert with the Drinking Water Utility, reduce non-irrigation residential water use.
3A1. Strategy - Implement a volume-based residential rate structure for the Wastewater Utility.
Basing residential wastewater rates on the volume of drinking water consumed should result in improved water use efficiencies for both the Wastewater and Drinking Water utilities. Rates for commercial wastewater customers are already flow-based.
Additionally, this strategy addresses potential financial inequity issues associated with the current flat monthly rate for residential wastewater. As Utility revenues will need to be maintained through the rate re-structuring, rates for some customers will inevitably increase. A financial analysis has been completed as part of this Plan and we will initiate an effort to implement a volume-based rate structure in 2014. Also see Strategy 5B1.
5B. Objective - Manage utility rates and connection fees consistent with the City’s guiding principle of growth paying for growth.
5B1. Strategy - Update utility rates and general facility charges (GFCs) to reflect costs of providing needed services, while looking for opportunities to improve the equitable distribution of charges.
The financial evaluation associated with this Plan evaluates the potential for basing residential wastewater monthly rates on drinking water consumption. Instead of the current flat rate for all residential wastewater customers, rates would be partially based on wastewater generation as measured by drinking water consumption (See Strategy 3A1).
In May 2013, Wastewater staff presented the UAC with hypothetical options for both two- and three-tiered residential wastewater rates. The two-tiered structure would provide a rate discount for very low consumers of drinking water. This structure would be an acknowledgement that the current flat-rate may not be equitable for some customers. The three-tier structure would provide an additional tier for typical water users. This tier would be designed to incentivize water conservation. Under both options, rates would be set annually using winter, non-irrigating season, drinking water consumption data.
We suggest that either the two-or three-tiered rate structure is viable. With UAC support and input for a specific option, staff will complete the detailed financial analysis in anticipation bringing rate structure changes forward to City Council as part of the 2015 budget process. In order to maintain the Utility’s total revenues, reducing rates for some customers would necessarily require increasing rates for others.
The options are further defined in the attached table (Attachment 1). Additional options can also be evaluated.
Neighborhood/Community Interests (if known):
Wastewater rates are a key driver of overall City Utility charges.
Options:
The UAC will be asked to forward a preferred wastewater rate structure to City Council as part of the 2015 budget process in the fall of 2014.
Financial Impact:
None at this time
Attachments:
1. Potential rate structure options