Conservation vs. Just Pricing
Oconee County put into place a water rate increase on April 1 with little fanfare and no public scrutiny.
The increase, which for those using more than 12,000 gallons per month was 30 percent or more, was presented to the public as an attempt to discourage water use.
The chairman of the citizen group that reviewed the rate increase and recommended it to the Board of Commissioners acknowledged, however, that there is no way to know if the increase will lower water use.
The rate increase was initiated by Board of Commissioners Chairman Melvin Davis, an examination of the available records shows, and the rate structure was proposed by the Utility Department, not the citizen group.
Moody’s Investors Service noted the rate increase favorably when it reviewed the county’s sale of $20 million in revenue bonds to finance Oconee County’s portion of construction costs of the initial phase of the Hard Labor Creek reservoir project. Moody’s said the increase was put in place to "fund the additional debt service expenditures" associated with Hard Labor Creek.
The rate increase applies only to residential customers. The county left the rate for commercial and industrial customers unchanged.
The county announced the rate change in the Spring 2008 edition of The Reservoir, the newsletter of the Utility Department.
"As recommended by a citizen advisory committee, effective April 1, the Utility Department will implement a revised residential conservation rate plan that will further promote conservation," the newsletter said. "The purpose of conservation pricing is to reward low users with lower pricing and charge more to those using excess amounts of water, primarily for outdoor watering."
Prior to the rate increase, the county had a four-tier structure for water rates for residential users but only a two-tier structure for commercial users.
After the increase, the county had a six-tier structure for residential users, with the higher rate changed from $4.80 per 1,000 gallons of water used to $6.72 per 1,000 gallons of water used. That is an increase of 40 percent. The commercial rate structure remained unchanged.
The Board of Commissioners approved the residential rate increase at its regular meeting on March 4, 2008, with almost no discussion.
Jim Kundell, chairman of the county Drought Contingency Committee, presented the recommendation of the rate increase to the Board. Commissioner Margaret Hale made a motion to approve the increase, and Commissioner Chuck Horton seconded it. The motion passed unanimously.
I filed an open records request with the county on May 13, 2008, asking for details of the work of the Drought Contingency Committee.
Specifically, I asked for documents relating to the appointment of the members of the committee, the charge given the committee, minutes of meetings, public notices "informing citizens in advance of the meetings of the Drought Contingency Committee," all reports and documents used by the Committee during its deliberations, and all reports and recommendations produced by the committee.
The county gave me a packet of documents for review and copying. The county did not provide any evidence that any meeting of the Committee had been announced to the public, any minutes of meetings held, or any documents produced by the Committee.
According to the documents I was given, BOC Chairman Melvin Davis sent an email message to County Administrative Officer Alan Theriault at 3:53 p.m. on Dec. 31, 2007, asking Theriault to convene the Drought Contingency Committee after the first of the year. "It may be appropriate to revise our rate structure to reward conservation of water," Davis wrote.
The Drought Contingency Committee had met during the fall to produce a revised Outdoor Water Use Ordinance for the county.
Theriault wrote back to Davis five minutes after receiving his Dec. 31 email indicating that "Discussions with the Committee indicated they wanted to review pricing." Theriault said he would call the Committee together after the middle of January.
On Feb. 5, 2008, Jane Greathouse, the deputy clerk for the county, sent an email message to the 10 members of the Drought Contingency Committee asking if they would be able to meet on Feb. 19 in the Grand Jury Room at the courthouse.
The members of the Committee were: Sonia Adsit, Mildred Bell, Gary Dodd, John Glisson, Mack Guest, Henry Hibbs, Chris McClintock, Charles Osborn, Bill Ross and Kundell.
On Feb. 5 Theriault also sent an email message to John Hatcher, then the head of the Utility Department, telling him of the Feb. 19 meeting. Theriault said he knew that Hatcher "had worked on some conservation pricing a few weeks ago" and asked Hatcher to send those suggestions to him as well as "any other ideas that you think are worth floating out to the committee."
That meeting took place on Feb. 19, according to the notes I was given, and early on the morning of Feb. 20 Theriault sent Kundell a brief summary of the meeting via email. Kundell replied later in the day suggesting a change in the wording of the note regarding the decision not to increase the rate for commercial users.
The original note contained as a bullet item: "Not adjust rates for commercial/retail customers (already paying the highest rates/recession/etc)."
Kundell suggested this be changed to: "Maintain rates for commercial users..."
The email did not indicate who attended the meeting, but a set of notes provided to me in response to my open records request contained the hand-written list of Adsit, Bell, Dodd, Glisson, Ross and Kundell.
I visited with Kundell in his office at the Carl Vinson Institute at the University of Georgia on Aug. 21, 2008, to discuss the work of the Drought Contingency Committee, and he indicated that not all the members attended the Feb. 19 meeting and he thought the list I was given was of those who did attend.
Kundell, who is retired but maintains his office at UGA, said the Drought Contingency Committee had met several times during the fall to discuss water regulations and "for whatever reason, they called us back together to look at and make recommendations."
Kundell said the Utility department presented rate increase options to the Committee, and the Committee accepted the rates provided.
"It is hard to anticipate how effective it is going to be," he said. "You have to put it in place and see how it works. It is an adaptive management approach."
Kundell said he didn’t remember much of the discussion about commercial rates. "We focused primarily on residential," he said. "The logic is that businesses already have an incentive to conserve."
"It might be the county isn’t interesting in putting it too high," he said. "It might discourage business."
Kundell said that all meetings of committees such as the Draft Contingency Committee are open to the public, but he does not know what–if anything–the county did to publicize the Feb. 19 meeting.
Prior to the March 4 vote of the BOC, the county had a four-tier structure for water rates for residential users but only a two-tier structure for commercial users.
After the vote, the county had a six-tier structure for residential users, with the highest rate changed from $4.80 per 1,000 gallons of water used to $6.72 per 1,000 gallons of water used. That is an increase of 40 percent, and, according to the notes provided by the county, was the higher of two rate increases considered.
The least amount a user of water in the county can pay each month is $14.04, and that figure was not changed with the new rate structure. That rate covers up to 2,000 gallons of water use per month. Someone who uses 5,000 gallons of water per month pays $14.08 per month for the first 2,000 gallons and then $11.40 more for the extra 3,000. That figure also was left unchanged when the rates were increased.
After 5,000 gallons of use, however, the rate increase kicked in. A residential customer who used 12,000 gallons of water before the rate increase would have paid $54.63. After the increase, that customer would have paid $60.70, or an increase of 11.1 percent.
A customer who used 15,000 gallons of water per month with the old rates paid $69.03. With the new rates, a customer using this amount of water pays $79.42, or 15.1 percent more.
Commercial customers pay the same base rate of $14.04 per month as residential customers. For that amount, the commercial customer can use 2,000 gallons of water per month. After that, commercial customers pay $4.80 per 1,000 gallons of water used, regardless of how many gallons they use.
This means that a commercial user of 15,000 gallons per month now pays $76.44, or $2.98 less than a residential user of 15,000. Prior to the rate increase, the commercial user of 15,000 paid $7.41 more than the residential user of the same amount.
Commercial users vary in size and water demand. A small retail shop might well use 2,000 gallons per month or less and pay the base fee of $14.04.
The new hotel under construction at 3500 Daniells Bridge Road, however, was promised water availability of 19,500 per day in a letter from the Utility Department to the developer on Jan. 9, 2007. For a 30-day month, that amounts to 585,000 gallons.
With the current commercial rate, the hotel, if it uses that amount of water in a month, will pay $2,812.44. If the hotel were a residence and paid at the new residential rate, it would pay $3,907.42, or 38.9 percent more.
A smaller hotel under construction on Virgil Langford Road was promised 12,700 gallons per day of water in a letter from the Utility Department of Sept. 10, 2007. That amounts to 381,000 gallons per month. Its owner will save–at maximum use–$703.30 because the residential rates were not applied to it.
All of these calculations are shown on my web site, with the other documents from this story.
Chris Thomas, currently the head of the Utility Department, appeared before the Board of Commissioners on June 24 to announce the county was lifting its ban on total outdoor watering. Citizens currently are allowed to water one day per week. In late August, the Utility Department began putting up signs around the county informing people that they were allowed to water.
What impact the "conservation" pricing will have on people’s decision to water remains unclear.
If residential customers use more than 5,000 gallons of water per month, they are going to pay more than they would have paid before the rate increase.
And the county Utility Department will have more revenue than it would have had withour the April Fool’s Day "conservation" rate increase.