2012-2014 Water Rates

As you may have heard, City Council is currently considering the 2012 to 2014 water rates package from Seattle Public Utilities (SPU). This package will set the residential, commercial and, to some extent, wholesale water rates for the next three years.  The Council oversight committee for SPU–the Seattle Public Utilities and Neighborhoods (SPUN) Committee–has completed review of SPU’s water rate proposal and recommended changes that will be finalized during Council approval of the proposed 2012 budget in November.

Seattle has one of the most advanced water systems in the country, if not the world. We live in a city where any resident can open the tap for a glass of safe, quality, clean tasting drinking water. We have made decisions that will protect our water supply for decades to come, such as putting lids on our open-air reservoirs and in turn creating new parks and green spaces for communities like Cal Anderson Park and Jefferson Park. We also own and operate two pristine, protected watersheds in the Cedar River Watershed and South Fork Tolt River Watershed.

In order to preserve this water system now and into the future, the SPUN Committee is endorsing a water rates package that includes increased rates. I fully understand that amid the Great Recession, many families are struggling to pay their monthly bills, and any increase in fees or bills right now has an impact on a family’s bottom line. We have worked hard for the past  three months to further reduce the size of the rate increase through additional cost cutting and efficiencies, but there are also regulatory requirements and  essential ongoing operations and maintenance needs that I feel are necessary for the long term health of the water system that we all own and benefit from.

Here are some specific drivers of the rate increase:

• The vast infrastructure improvements we have made in the recent past were largely financed with debt. These improvements include meeting federal regulations around reservoir covering, habitat restoration in our watershed, and water treatment facility improvements. We will enjoy the benefits of these investments for years to come, and we also will be paying a portion of those costs each year as principal and interest on the bonds we issued.
• The cost of doing business continues to go up as health care costs and inflation make it more expensive to run a business the size of SPU. And, SPU has eliminated positions and found other efficiencies to help reduce the impact of these cost increases.
• The slow economy and the cool, wet summers of these past few years combined to reduce demand for water and has left a gap in revenue that can only partially be made up by cost reductions. A significant decline in construction has also led to fewer new water hookups, further eroding revenue projections.
• The city’s financial policies are also driving part of the rate increase. Seattle has great bond ratings, meaning that we get lower interest rates when we issue long term bonds to raise money for large infrastructure projects because we are very conservative in how we manage our money. Bond ratings can be easily downgraded but take years to get back up. In order to maintain our current ratings, we need to bring in additional revenue which will pay a larger portion of current capital projects.  The City Council is committed to maintaining the strong financial health of our utilities.

Conservation also plays a role in affecting rates and utility bills in a couple ways.  As we all use less water through conservation that reduces demand and pushes rates up a bit.  At the same time, the fact that we use less water means our bills go down in the short term.  In fact, conservation is so strong in Seattle that we are consuming the same amount of drinking water that we did in 1957, while our population has doubled since then. Conservation also leads to significant long term savings–at our current consumption rates, thanks largely to our strong conservation ethic in Seattle, we have a guaranteed safe, quality reserve of drinking water for at least the next 60 years. This assurance allows us to avoid significant future costs of developing new reservoirs and water sources in the future.

You can learn more about how your home or business can conserve water at SPU’s Water Use Reduction page and the Saving Water Partnership where you’ll find conservation tips, videos on how to identify leaks, rebates on high efficiency toilets (free for low-income residents who qualify) and free rain sensors for irrigation systems.

To live within their means over the last three years, SPU reduced spending by $10.6 million. These reductions were built into SPU’s initial rate proposal.  Because we are well aware of the cost concerns of households and businesses, the SPUN committee did not simply accept SPU’s entire proposed rate increase package. Over these past three months, my office and Council Central Staff have been digging into the details of the package and scrutinizing many areas of SPU’s water fund budget in search of rate reductions.  By cutting their consulting budget, not filling vacant positions, and readjusting some assumptions about future economic growth, SPU came back with additional savings. Under the package SPUN Committee recommended yesterday, the rate increases will be lower than originally expected, as seen in the table below.

Finally, low-income Seattle residents who earn less than 70% of the area median income are eligible for savings of 50% on their utility bills. To learn more about eligibility and find out how to apply, visit the Seattle Human Services Department website on Utility Assistance.

Please feel free to contact my office or leave comments below if you have any questions about the rate package, 206-684-8800 or mike.obrien@seattle.gov.