Friday, November 13, 2009

Water Rates Explained

There have been notices, newspaper articles, newsletter blurbs, and public open houses, but the thing we've seen most of, with respect to the new water rates, is confusion. To the many explanations that have been given I add my own, hoping that adding another viewpoint will help to increase understanding.

Disclaimer: Views expressed here at the blog are my personal views and do not represent the official position of the City. Though I try my best to be accurate, you should not act on any information you read here without first confirming it through the PI hotline at 801-763-5281.

If your house is the typical American Fork household, sitting on a quarter-acre lot, your water bill should increase to about $30 per month. You are already paying this increase if pressurized irrigation (PI) has already come to your house. If not, you will begin to pay the increase starting NEXT MONTH with your December 2009 water bill.

If your house is not the typical American Fork household, but you live on a large lot or you are a business owner or an agricultural user, yours is a special case and I will explain your rates separately.

What is the breakdown of the increase? Users who connect to the PI system will now be subject to two rate schedules. Culinary (aka indoor, potable) water will be billed at $14 for the first 6,000 gallons. This is the base rate. After the first 6,000 gallons, the charge will be $2 per thousand gallons up to 8,000 gallons, $2.50 per thousand up to 10,000, $3 per thousand up to 12,000 gallons, and $3.31 per thousand for all amounts above 12,000 gallons. This is a sliding scale that encourages conservation of culinary water and discourages its use out of doors.

That's the first $14.

Irrigation water (aka outdoor, pressurized, PI, or secondary), is optional. However, culinary overage charges will encourage most users to opt for a PI connection so they can afford to water their lawns. PI will be billed not according to usage but lot size. The PI rate is $14 per month (the base rate) for lots up to 9,000 square feet (about .20 acres) with an additional charge of $0.001750 per square foot per month for any area over 9,000.

That's another $14, for a total of $28.

Add an extra $2 for culinary overages or a larger lot size, and the typical monthly water bill adds up to $30. This is a significant increase, very significant, but it is offset, at least in part, by the fact that if you connect to PI you will no longer pay overage rates for your summertime outdoor water.

This still leaves a few questions.

Why is this increase taking effect for my household when PI water is not yet available to me? Most households are already paying the increase, but a few are still waiting for construction to pass their house this month. If this is your household, you will not begin paying the $14 PI rate until you connect to the PI system. However, you will begin paying the new culinary rate on your December water bill. The new culinary rate took effect city-wide on November 1, with the first payment coming due on December 1. This is in accordance with City ordinance, which was structured this way (1) because November coincides with the completion date for construction, and (2) so that the City can begin making payments on the bonds without assessing higher property tax rates.

If you are considering delaying your connection to the PI system so that you can delay paying PI rates until spring, please keep in mind that you must connect within six months of your eligibility. After six months, you will be charged a hook-up fee of $250.

Why must I pay PI rates year-round when the system is only operational from April 15 to October 15? This is the City's version of an equal-pay plan. For most residents, it is more affordable to pay a lower rate year-round than a higher rate for six months of the year.

What is the water rate refund credit? Many residents were switched over to the new culinary rates last summer, but did not understand the impact and continued to water their yards with culinary water. Others attempted to connect to PI but were stalled because of weather or because contractors were unavailable. Whatever the reason, many residents accumulated punishing overage charges of hundreds of dollars before they realized the problem. The City Council voted to refund these overages, reasoning that (1) culinary overages were not built into the revenue model, and that (2) the revenue model is based on an 85 percent connection rate to PI city-wide. In essence, this refund was planned as an incentive to encourage more residents to connect to PI.

The refund was carefully structured so that residents would be credited as though they had been paying PI rates all along, and thus would have no advantage over those who did connect in a timely manner. It is available only to those households who connect to PI by December 1, 2009. If you did not pay punishing culinary overage rates over the summer, the refund would not apply to your household.

What are rates for large lot sizes? If your lot is larger than one acre, you may request and pay for the purchase and installation of a water meter. Then your PI water will be billed at the rate of $14 for usage up to 8,000 gallons, with a progressively increasing scale for usage above that threshhold. Your culinary water rates will be the same as those for the rest of the city.

What are rates for business owners? Actually, rates for business are the very same as for residents. However, because most businesses use water on behalf of many hundreds of consumers, they are certain to exceed the 6,000 gallon base rate. Hence their increase is far greater than $30 per month. This inequity was not foreseen when the original rate structure was passed. When its impact first began to be felt, the city council voted to flatten the culinary rate structure for usage above 12,000 gallons. This provided some relief to businesses; I only hope the measure will prove sufficient to keep them open and well supplied with water.

What are rates for agricultural users? Agricultural users who own at least one irrigation share per acre of land and who qualify under three other provisions of the ordinance will be assessed $1 per share per month for PI water. (This fee is in addition to assessments made by the irrigation company.) Culinary rates will be the same as those for the rest of the city.

Why do we have to pay such high rates for water in American Fork? It's not pretty, it's not fair, and it's not cheap. There's nothing I can say to make you or me feel better about the situation. But the sad fact is, if the City had installed pressurized irrigation in 1994, when the need was first predicted, it would have cost only $9 million. That's $40 million in savings , which would have translated to an eighty percent savings over the new water rates.

The lesson? Deferring major infrastructure expenses does not pay. It's a lesson we do well to heed as we consider more of our City's pressing needs including road maintenance and public safety.


Blogger Wendy said...

Heidi -

I received my utility bill today. The information on the bill states that the new culinary billing starts as of November 1. However, in my opinion, it should state that the new rates started back on October 12 (the date of my last meter read). I called the city staff to verify and discovered that it is true that all culinary water that I have used since October 12 will be billed at the new rates. For most of the city this is probably not a problem. But it will be a huge problem (and bill) for us and many of those who live in our area.

It was in early October that the city was cutting into our yards to lay the pipe for the new system. I, like many other homeowners in our area, had to water after the pipe was brought into our yards in order to save the sod that had been cut out. We were using our culinary water system much beyond October 12 for circumstances beyond our control.

It is my opinion that the city should either do an additional meter read for our area and then apply the new rates afterwards or give us a rebate on our bills to ensure that we are not unfairly penalized for higher rates that we weren't aware would be applied between October 12 and November 1. I understand that a similar exception has already been made for many other homeowners to whom information was also unclear.

Could you let me know which member of the council sits on the finance committee? I'll make the same plea to them.

Thanks as always for all that you do for our city!
Wendy Hickman

5:29 PM  
Blogger Heidi Rodeback said...


I'm sorry for this, truly a frustrating situation! By my read, you should qualify for the water rate refund credit so long as you were connected to PI by December 1. But my opinion by itself doesn't count, so I would definitely recommend bringing your case to the finance committee. Its members are myself, Rick Storrs, and Dale Gunther. Dale Gunther has been the point person for PI, so I would start with him. I think you'll find him a very good listener.


9:22 PM  
Blogger Wendy said...

Heidi -

We are not actually connected yet. We still have 6 months from install (which was back in October) to get connected. The connection would be irrelevant anyway because the upper reservoir hasn't been completed and there isn't any water for us to use. Our sprinkler guy recommended waiting until spring to do the connection/inspection.

My understanding is that the current refund is being offered to customers for whom the water has already been available. I think this is a new situation.

I'll plass the information along to Dale and Rick.


10:10 PM  
Blogger Heidi Rodeback said...

I still think you have a valid case and I'm willing to consider your request.

1:48 PM  

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