by Bob Geary
Raleigh City Council just voted 5-3 to increase water rates by 13.5 percent while also postponing the effective date of tiered water rates -- a major conservation initiative that would've resulted in a rate cut for low-usage residential customers -- by another seven months.
(Update: Raleigh's rules require that a second vote be held in November since the rate hike did not pass by a super-majority of 6-2 or better. A city press release is copied below the fold with some additional information.)
Councilors Russ Stephenson, Thomas Crowder and Rodger Koopman -- a lame duck since he was defeated for re-election on October 6 -- were the dissenters. They and Nancy McFarlane have been pushing for tiered rates since the drought of 2007-8, which began more than two years ago. They were put off a year ago when City Manager Russell Allen persuaded the Council to wait until this December 1, when a conversion of the city's database software was supposed to be finished and ready to handle the change in billings. But Allen reported today that the system's not ready yet and won't be until next July 5 -- right in the middle of the summer watering season.
Koopman, a software techie himself, argued a year ago that a "patch" could be made to the old software, allowing tiered rates to take effective much sooner. He lost then, and said today that the Council should've insisted. Stephenson, too, said he wasn't convinced that a "Plan B" didn't exist in one of Allen's drawers to initiate tiered rates on time (on December 1, that is) if the Council refused to move the date.
They got Crowder's vote, but not McFarlane's, and not Mayor Charles Meeker's either. Meeker moved to put a "blended' rate hike into effect December 1 instead of the planned tiered-rate schedule, while also asking Allen if he couldn't get the latter in place quicker than July 1. McFarlane, Mary-Ann Baldwin, James West and Phillip Isley (another lame duck since he didn't seek re-election) backed Meeker -- and Allen.
The tiered-rate schedule called for rates of $2.09, $3.09 and $4.09 per 1,000 gallons of water consumption, with the break points at less than 3,000 gallons a month, 3,000-7,500 gallons a month, and over 7,500 gallons a month. The current rate for residential users (commercial customers wouldn't be effected) is $2.14 per 1,000 gallons; the "blended" increase voted by Council is to $2.43, a 13.5 percent hike.
Allen, and Meeker, argued that the Council has no alternative to raising rates in order to meet debt-service obligations on past water system capital projects. The water system is supposed to be self-funding; the Council could use property or sales tax revenues to subsidize it, but it's never done so, apparently.
Allen apologized for not getting the job done on time, but he also minimized the problem, saying that a rate hike now isn't a big problem since it's the off-season for irrigation. On the other hand, Koopman and Stephenson worried that next July will be primetime for watering, and people will get a nasty surprise when their (giant, irrigation-inflated) bills arrive in August for water they unwittingly used in July.
Allen's memo to the Council is copied below the fold:
The city's press release:
CITY OF RALEIGH DELAYS IMPLEMENTATION OF
TIERED WATER RATES, MONTHLY UTILITY BILLING
The City of Raleigh is not switching to tiered water rates and monthly utility billing on Dec. 1 as was originally planned. These changes are instead scheduled to go into effect on July 5, 2010.
The City needs more time to test its new Customer Care and Billing system for the tiered rates and monthly utility billing cycle in order to make sure water and sewer customers experience a smooth transition to the changes.
The City will continue with bimonthly billing for water and sewer service through July 5. In place of the tiered water rates that were to take effect on Dec. 1, the City Council today voted 5-3 to tentatively approve an amended water and sewer rate structure. The amended rates are revenue neutral in that they are expected produce the same amount of revenue the tiered rates were projected to raise through next July. The council will take a final vote on the amended water and sewer rate structure at its Nov. 3 meeting.
The City of Raleigh has about 175,000 metered water and sewer connections service 435,000 customers in the Capital City and the towns of Garner, Rolesville, Wake Forest, Knightdale, Wendell and Zebulon. All of the City’s water and sewer customers will transition to a monthly billing cycle on July 5. Also on that date, residential customers in Raleigh and Garner will change to a tiered rate billing structure to promote water conservation.
Russell Allen's memo to Council:
Dear Mayor Meeker and Council Members,
> As you are aware, we have been implementing various components of our
> Enterprise Resource Plan (ERP) over the last number of months. We have been
> able to Go Live with the time and attendance (payroll) component and with the
> financial package (accounting, revenues, accounts payable, purchase orders,
> requisitions, travel authorizations, etc.). These have been enormous tasks
> with considerable business process change.
> Concurrently, we have been working on the Customer Care and Billing (CC&B)
> module which will allow us to move to monthly billing and tiered water rates.
> Our projected Go Live date has been December 1, 2009. Unfortunately, we will
> not be able to meet that date. Our first priority has always been to make
> sure that the customer experience with the new system was positive. In order
> to make this assurance, we must have adequate time to test our system before
> Go Live. The conversion of existing billing data has been more difficult than
> we expected, which has delayed testing. We cannot assure our customers of
> this positive experience with a December 1, 2009 Go Live. Our projected Go
> Live date is July 5, 2010 in order to fulfill that pledge. Please see the
> attached memo from Gail Roper, our Chief Information Officer for more details.
> Since Council had already approved a tiered water rate schedule effective
> December 1, 2009, we will need to place on the next Council agenda an
> adjustment to our existing rate schedule which will generate a revenue neutral
> effect for the remaining 7 months of this fiscal year. This will be during a
> period when there is little need for irrigation. Our water supply is in
> excellent shape. Year round restrictions are in place and our customers
> continue to conserve. This will also have a short term stabilizing impact on
> our revenues given that tiered rates brought many unknown results. Our
> financial margins and coverages are already very close to our targets.
> I assure you that all City staff and outside consultants who have been
> involved with this project have given 100% effort to meet the projected
> schedule of December 1, 2009. It is disappointing for all of us, and I know
> for you as well. However, I do believe the investment in this additional time
> will be beneficial in the long term for a more successful implementation of
> such a significant business practice change. I know our customer experience
> will be better.
> I will be happy to have any follow up individual conversations with you.
> J Russell