Posts Tagged ‘rates’February 21, 2011
Most of us go to the faucet for a glass of water and don’t think a thing about it, like how it got there or what it cost for the glass of water. The only time we really give it much thought at all is when we receive our monthly “water bill.”
If I asked you how much you pay for water each month, what would you tell me? About $65? Did you know the average customer in Des Moines pays only $16 or $17 a month for all the water they use inside their home? Water service is perhaps the greatest bargain in my home month after month. I cook with it. I drink it. I bathe my kids in it. I toil through loads (and loads!) of laundry with it. It doesn’t run out, and I don’t have to run to the store to get it. It makes my life simple, all month long, for only $16.
It’s easy for us to forget water is such a great bargain, because our “water bill” runs higher than that every month. That’s because the Des Moines Water Works statement you receive has other services on it besides water–other services that also make your life convenient and easier. Here’s a run-down of your bill (see example bill statement below):
Water charges (A) – The cost of water is typically half the total on your monthly “water bill.” Water charges are determined based on the amount of water you use and the water rate per thousand gallons as established by the DMWW Board of Trustees. In addition to this volume charge, each customer pays a flat availability fee each month of $5.00. This covers fixed costs, such as the cost of the meter inside your home, the statement you receive each month, the pipes and mains that bring the water to your home, etc. You can find the amount of water consumption at the bottom of your statement each month (B). Because of the types of meters DMWW uses, water consumption is shown in cubic feet. If you want to know how many gallons you use a month, multiply your consumption in cubic feet by 7.4805. For example, a typical 2-person household uses 500 cubic feet, or 3,740 gallons each month.
City charges – The City of Des Moines contracts with Des Moines Water Works to bill for City charges, including sewer, stormwater, and solid waste.
- Like water charges, sewer charges (C) are based on the amount of water you use each month (the water you use in your home eventually goes through the sanitary sewer system as it leaves your home), but the rates are set by the City of Des Moines. There is also a flat customer service charge for fixed costs associated with the sanitary sewer system.
- Solid Waste charges (D) reflect the cost of curbside garbage removal inside the City of Des Moines.
- Stormwater charges (E) are paid by all City residents to provide funding for the maintenance of existing stormwater facilities and for the construction of new facilities to accommodate stormwater run-off.
City ordinance requires that property owners pay non-metered charges (sewer customer service charge, stormwater, and solid waste) when the service is available, regardless if a property is inhabited or the service is used.
Understanding your water bill is key to understanding and appreciating the value of water service delivered right to your faucet. As for me? I wouldn’t want to live without it…even if it meant getting out of doing laundry.
DMWW sets water rates to adequately fund operation and infrastructure investments to ensure high quality water to our customers. Even though water consumption has declined, the utility has experienced rising costs. DMWW pays all of its operating expenses but is not collecting sufficient revenue to pay for the needed infrastructure improvements. Instead of taking on debt to invest in improvements, a water rate increase has been approved to help bring revenues in line with costs.
Costs increased 8% in 2009 due to treatment chemicals, system maintenance labor and materials, lime softening residuals disposal and employee benefits. Staffing levels vary little in periods of reduced consumption. Our treatment facilities and distribution system must be maintained regardless of the amount of water consumed.
DMWW has a constant focus on containing costs. Recent efforts to reduce costs include:
- The addition of two treatment plants, one in 2000 and one later this year, resulted in only one staff addition
- Customer pre-termination calls that have reduced field service collection cuts by 25%, thereby allowing field service staff to focus on other areas like more frequent testing of large meters
- E-Statements to reduce the cost of billing
- Automated processing of bills, thereby eliminating a nightly IT operator position
- A work-from-home program for customer service resulting in handling more calls/account activity per customer representative
- Coordinated with Polk County on a joint asphalt project that saved us $150,000
- Reduction of senior management by 20%
- A 0% salary increase to DMWW management team and professionals in 2010
- Successful application for over $5 million in FEMA funding for riverbank repairs to protect our treatment plant collector well system
DMWW Board of Trustees has not made a specific decision about the size of any water rate increase for 2011. They will do so at their October 19, 3:30pm Board meeting. The Trustees have only concluded thus far that water rates and charges need to keep pace with the utility’s Cost of Services. Rates will be set before board members vote on the utility’s budget in November. If approved at the October 19 Board Meeting, water rates will take effect April 1, 2011.
Instead of taking on debt to invest in improvements, a water rate increase is being considered to help bring revenues in line with costs. We have a lot of money invested in water pipes, pumps and treatment plants, and we need to keep up with that investment in maintaining those facilities. DMWW’s revenue has not kept pace with costs since 2003. DMWW pays all of its operating expenses but is not collecting sufficient revenue to pay for the needed infrastructure improvements. The Board of Trustees recognizes DMWW cannot continue this trend without saddling future rate payers and generations with a large tab because of the failure now to set rates and charges to cover the true cost of the utility’s operations.
In spite of these financial and source water challenges, DMWW continues to produce high quality water for our customers. One example of our exemplary water quality is the recognition received in April 2008 by Forbes.com who ranked Des Moines as being the best city in America for clean drinking water.
Rates for the typical Des Moines customer could go up between 10 percent and 13 percent next year to help bring revenues in line with costs. That would result in water bills that are $1.50 to $2.00 more per month for a two-person household. Monthly increases would range between $2.00 and $3.00 for the average four-person household. Currently, the water portion of the bill for an average two-person household is about $15.00 a month and roughly $25.00 for a four-person home.
The proposed rate increase is in response to increases in costs to treat the water and maintain our distribution system. DMWW is committed to spending our limited resources wisely and continually evaluates our programs to be as efficient as possible.
Chemical prices are expected to increase approximately 5 percent in 2011. While significant, the increase is less than those seen over the past few years. Complex pollution issues in the Raccoon and Des Moines rivers, such as routinely elevated levels of fecal bacteria, often complicate the treatment process. Various stretches of the two rivers are on Iowa’s impaired waters list because of problems with bacteria, algae and nitrates, among numerous biological impairments. Water Works staff continues to emphasize the need for aggressive improvements in the sprawling watersheds that feed into the rivers.
Also, wetter-than-average summers over the past three to four years have led to decreased demand and relatively flat water sales.
The last rate increase was April 1, 2009. The availability charge, the fixed amount of the water bill intended to cover Water Works fixed costs per customer whether or not any water is used, was increased by $2.00 per month in April 2010.