Charlotte‐Mecklenburg Utilities 2010 Rate Study Round 2 Public Meeting Summaries MEETING 2 – WEST Tuesday, October 26, 2010 Clanton Pavilion in Clanton Park 3132 Manchester Avenue Charlotte, NC 28217 Charlotte‐Mecklenburg Utilities held a public meeting on Tuesday, October 26, 2010, at 6 p.m. to gather feedback for the 2010 Water and Sewer Rate Study. The Public Meeting included a presentation and description of potential alternatives to the existing water and sewer rate structures and gathering input and feedback regarding the alternatives. A dedicated time period for the public to provide feedback occurred at the end of the meeting. Public Comments: Q. What part of the tiers and the revenue does the City pay? What happens to the fees that the customer pays? A. The Utilities system is funded exclusively by user charges or the fees that customers pay. No part is funded by taxes. You may have been referring to the first alternative where we talked about a fixed charge. If a fixed charge is implemented then that would generate a certain amount of revenue, so the tiered rates would go down because you are able to recover some of the revenue needed with the fixed charge. Q. How do you get the unit rate and how is that implemented on the customer’s bill. A. The dollar amount or cost of the sewer system is divided by the number of units you are using gives you the unit rate. You take the unit rate and what happens is that on your bill you see the amount of usage you have in a month. If that amount is less than 24 units in that month, you multiply the unit amount by the $4.31 to get your bill amount. What we are doing now, is if you use 24 in a month and we shift the sewer cap down to 16, you would take the 16 and calculate your bill based on that amount of usage. So you are being billed on a lower amount of units, but the unit rate goes up. Q. Please explain the “exempt pay” on the irrigation only meters. A. This if for irrigation only meters. This alternative gives them a conservation incentive if they install smart controllers that allow them to manage their irrigation more efficiently. If they do this, they get the incentive that they will be billed at the Tier 3 rate for all usage. Q. How will this all be implemented? What is the decision making process for the rate study? A. None of the alternatives that we presented tonight are recommendations at this point, these are just ideas that we wanted to get public feedback on. The next step is to take the feedback we are gathering during the public meetings and through the public feedback portion of the rate study website and then we will go back and refine the alternatives and present recommendations to the Restructuring Government Committee of the Charlotte City Council and to Charlotte Mecklenburg Utilities staff. This will happen by the end of the year. Then the Charlotte City Council will vote on the recommendations in early 2011. Q. Can you give us more information on the meter sizes that you mentioned in the presentation? A. This alternative was in reference to the irrigation only customers. You can scale the tiers or rate that they pay based on the size of the meters. So, a customer with a higher sized irrigation meter would get more allowance in the tier 3 rate before they move up to the tier 4 rate. Meeting 2‐ CENTRAL Wednesday, October 27, 2010 at 6 p.m. Charlotte‐Mecklenburg Government Center 600 East Fourth Street Charlotte, NC 28202 Charlotte‐Mecklenburg Utilities held a public meeting on Wednesday, October 27, 2010, at 6 p.m. to gather feedback for the 2010 Water and Sewer Rate Study. The Public Meeting included a presentation and description of potential alternatives to the existing water and sewer rate structures and gathering input and feedback regarding the alternatives. A dedicated time period for the public to provide feedback occurred at the end of the meeting. Public Comments: See streamed video for public comment Meeting 2 ‐ NORTH Thursday, October 28, 2010 at 6pm Charlotte‐Mecklenburg Utilities Lee Dukes Water Treatment Plant 7980 Babe Stillwell Road Huntersville, NC 28078 Charlotte‐Mecklenburg Utilities held a public meeting on Thursday, October 28, 2010, at 6 p.m. to gather feedback for the 2010 Water and Sewer Rate Study. The Public Meeting included a presentation and description of potential alternatives to the existing water and sewer rate structures and gathering input and feedback regarding the alternatives. A dedicated time period for the public to provide feedback occurred at the end of the meeting. Public Comment: 1. CMU should go to quarterly billing. Monthly billing is extremely costly. You could save 50% of your billing and meter reading costs by doing this. Hundreds of utilities do this. I don’t know why you don’t. 2. Related to this, your sewer costs should be based on winter quarter use. Currently the way you bill by linking it to your water bill is extremely expensive during the summer months. I believe this is unfair and possibly illegal. This is paramount to stealing from your customer. You could be easily done by linking your sewer costs to the winter quarter use. People don’t use water outside during the winter so it would be easy to do. 3. You should go to a simple 2 tiered water system. First tier is true water cost and the second is a conservation tier. This is the amount you would use in addition to your winter quarter use. The four tier system is complicated and it causes problems when your meter reading timeframe is extended beyond your 30 days. 4. I appreciate you all doing this. I’ve already learned a lot and think this is a good approach. I am on the home owner’s board at Birkdale and am here to represent them. I became concerned when my bill began creeping up and up so I started looking at my bill more closely. The only thing that I am doing differently is that my 25 year old son has moved back into my home with me. My neighbor says that her bill is going up, too. I do think there is a problem because I have experienced it and I would like to be part of the solution. 5. I am a developer. I have been following the rate study and also sit on a committee called the CMU Developer Liaison Committee and was appointed to that committee by the City Council about 10 years ago. One of the things we do in this committee is that we look at standards, methods and materials. We also review the capacity fees every year. Several years ago we were 100% below on recovery with our capacity fees. We have been on a plan where we have been raising our capacity fees to get to 100% recovery on our capacity fees. If you look at our capacity fees, there was a chart shown today at the Restructuring Government committee that showed all the capacity fees from across the state of North Carolina. The numbers shown are about 2 years old as far as CMU is concerned. I think we need current data. The other thing we need to look at in the capacity fees across the state is that you need know what is included in the capacity fees for each city and what other fees that they charge. CMU’s capacity is a 100% recovery of cost of service. It is a fair methodology that they have been using, but in the past it has been too low. In the past 3 years we have been 100% of recovery. It’s obvious that if you look at the towns by the coast, it costs them more for them to produce water. We have the Catawba River so that makes our cost to produce water lower. You have to know what is in each capacity fee. 6. In regards to option 1 where they propose to lower the sewer cap, obviously this will push people to put in the separate irrigation meter. 7. Conservation is a very important issue that has been brought up. If we continue to push conservation, then CMU will not make as much revenue, so will we be back here again next year because CMU needs more revenue? It seems that there is a conflict of interest here. I don’t have a lot of confidence in the meters. I’ve seen the meters and water usage spike, when I have Q.
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not been using more water. CMU tells me to put blue die in my tank to see if there is a leak. I am skeptical about what CMU is doing. What was the general motivation for looking at a rate structure change? When CMU commissioned this study, it was to have an outside firm look at the rate structure and determine what rate structure would best fit the community as a whole. These are revenue neutral alternatives that we are discussing and they are all designers to recover costs. Do multi‐dwelling users pay a fixed fee per unit? Does the proposed availability fee apply to each unit or only per meter if you have 1 meter per multi unit dwelling? The fixed fee only applies per meter, not by unit, but it is billed based on the size of the meter. Meeting 2 – SOUTH Wednesday, November 3 at 6pm South County Regional Library 5801 Rea Road Charlotte, NC 28277 Charlotte‐Mecklenburg Utilities held a public meeting on Wednesday, November 3, 2010, at 6 p.m. to gather feedback for the 2010 Water and Sewer Rate Study. The Public Meeting included a presentation and description of potential alternatives to the existing water and sewer rate structures and gathering input and feedback regarding the alternatives. A dedicated time period for the public to provide feedback occurred at the end of the meeting. Public Comment: 1. I would like to thank CMU for holding these meetings and seeking input on the proposed rate structures. I would like to address the proposed 50% increase in the capacity fees. New customers are the only customers who pay the capacity fees and I feel they pay more than their fair share of the charges. For capacity charges, CMU uses a methodology that calculates these fees annually that uses the capital expenditures for the plants, and trunk lines in their system. These fees have increased every year since I could remember. These fees do not just cover the cost for expansion for the system but also the costs to rehab the existing system for the existing customers. These new customers are mostly in new developments. Duke Energy and PNG install their infrastructures in the new developments and they pay for the installation. CMU puts the entire charge on the customer. This is important because when the neighborhood is annexed by the City of Charlotte, there is no cost to CMU for the annexation. Also, the maintenance and annexation costs to CMU are paid for by the rate structure. The maintenance and rehab costs to CMU lines are paid for in the rate structure. Finally, increasing the capacity fees will be a detriment to new businesses and hinder economic development. 2. I have comments about your presentation. I think it would be a good idea to look at a fixed fee based on the meter size. A good example of this is Nashville. Nashville also takes into account that people water more in the summer. They have set up a fee structure based on a 30% increase over the average winter use. This is a good idea. The smart sensor idea has been used across the country with some success so I think this is a good idea, too. Your current tier structure is confusing. Raleigh has a 3 tier structure that seems to work better than ours. CMU has no public mechanism for showing people how to find a leak. There is nothing on your website about it. People don’t know that there is an ordinance and guidelines that were set by the City Manager’s office. I recommend that you put that on your website. 3. I live in a neighborhood with 1 irrigation meter for 31 homes. I am curious about the smart sensor program. Why don’t you do a similar solution to what you currently do to the multi‐
family dwellings for irrigation meters? 4. I think the alternative that you presented that proposes to bill based on the average winter use is a good idea. 5. I looked into having a separate irrigation meter, but the cost was so prohibitive that it would take years to recoup the money. I think we should look at the examples of what other cities have done with their rate structure. 6. I came because I am a frustrated home owner. I have a roller coaster water bill – it’s up and down. I am frustrated with the customer service representatives and have had a difficult time getting through to someone who can help me. 7. Some people in my neighborhood are so frustrated with the irrigation costs that they have drilled wells on their property. 8. I am concerned about my water bill and I am glad that I came today because I was able to talk to the Customer Service Manager and I am hopeful because he is going to follow up with me and help me. 9. Our neighborhood does not have a problem with the proposed rate structures that you discussed tonight. Our problem is with the spiking water bills that we have been experiencing. We think there needs to be a policy change so that people don’t have to pay a bill that is in question while it is being reviewed and in dispute. Q. How will this all be implemented? What is the decision making process for the rate study? A. None of the alternatives that we presented tonight are recommendations at this point, these are just ideas that we wanted to get public feedback on. The next step is to take the feedback we are gathering during the public meetings and through the public feedback portion of the rate study website and then we will go back and refine the alternatives and present recommendations to the Restructuring Government Committee of the Charlotte City Council and to Charlotte Mecklenburg Utilities staff. This will happen by the end of the year. Then the Charlotte City Council will vote on the recommendations in early 2011. Q: Why is revenue stability so important now when we have had this problem with fixed costs since day 1? A: One way to handle this is to carry a large amount of reserves. In the past few years, CMUs reserves have fallen due to drought conditions and reduced consumptions. Since there is the same amount of revenue that has to be recovered, the rates have to go up to meet this revenue requirement when consumption is down. Q. Do homes that do not have a separate irrigation meter pay more for their water? A. If your meter is not irrigation only meter, you pay based on the 4 tier system and you pay sewer fees up to 24 ccf. If you have irrigation only meter, your fees are only at the tier 3 rate and you do not pay sewer charges. Q. You have fixed costs, but there is an accounting concept called matching. Why don’t your expenses match your revenue in the same accounting period? Why don’t you float a bond issue to amortize the majority of your fixed costs over a 20 or 30 year period, the useful life of those systems, and recover it through general revenue, rather than trying to recover it through water usage fees. Or use a combination of both. A. The majority of capital costs that CMU incurs, they issue debt for and they repay it over a period of time. Closing Comments from Barry Gullet: The purpose of the meeting tonight was to really talk about rate structures. I appreciate all the feedback we have gotten tonight and appreciate everyone coming out tonight. There have been a lot of questions tonight about water bills and customer service. This is a troubling issue and we are working very hard on these issues. We don’t know what is causing the rash of high water bills that have occurred over the past year. We have been looking at options and are still looking at options. We want to find out what is causing the problem. We looked at our equipment and found a small percentage of real equipment issues. This still does not answer the questions of why we are having all these fluctuating water bills. The equipment that we use in Charlotte‐Mecklenburg is not any different from what is used in other cities. We don’t know if it’s in our system. We are trying to find the problem. We have visited other cities, taken out equipment to them and had them review it to see if they can find a problem. We have not found the one single issue that is causing it. We have found several things that “could” be causing it. This is frustrating for us, because we want to find a solution for our customers. We are working so hard on this issue and want to find a solution for our customers. It is taking time; a lot more time than we like, but we are doing the best we can do. We need to hear from our customers so that we know what the issues are. We are working with the 311 call center on the customer service issues and hope that this will get better soon. We want to look at the high water bill issue systematically. We have a fine line to balance on how we collect on our bills and making billing adjustments. The reason for the rate study is different. The rate study stems from questions that have been raised to the equity of the rates across the system. We want our system to be equitable and meet the desires and needs of our community. The rate methodology does not necessarily change the costs, it just changes who pays for things and how things are paid for. It bothers me that some of you are hearing that you have to pay disputed bills or your water will be cut off. The policy is and the direction we are giving our customer service representatives is that the disputed amount should be set aside while we review the issue and see if we can determine why the bill has spiked. We see a whole range of skills, tools and abilities in how people are working on their own property to try to determine if they have a leak when a bill spikes. CMU is trying to determine how we can help with this issue. The culture in our industry has always been that everything on the customer side of the water meter is the customer’s responsibility and everything on the City’s side is the City’s responsibility. We are learning that sometimes the customer needs our help, but it’s a culture change for us because it means spending public money to go out and help a customer with a private issue. My message to you is that this is very troublesome for us, we are working on this every day; some of us are working all day, every day. Thank you again for coming out tonight. The CMU leadership team will be around after this meeting to talk to you and answer your questions. Thank you. Meeting 2 ‐ EAST Thursday, November 4, 2010 at 6pm Hickory Grove United Methodist Church 6401 Hickory Grove Road Charlotte, NC 28215 Charlotte‐Mecklenburg Utilities held a public meeting on Thursday, November 4, 2010, at 6 p.m. to gather feedback for the 2010 Water and Sewer Rate Study. The Public Meeting included a presentation and description of potential alternatives to the existing water and sewer rate structures and gathering input and feedback regarding the alternatives. A dedicated time period for the public to provide feedback occurred at the end of the meeting. Public Comment: Q. Would you define equity? Please give your definition as it applies to this rate study. A. Equity is making sure that customers pay their fair share. Making sure that residential customers don’t subsidize commercial customers and vice versa. Making sure that people who have a large lot and do a lot of irrigating doesn’t subsidize someone who has a small lot and does not do a lot of irrigating. It also means making sure that existing customers don’t subsidize new customers and vice versa. 1. I don’t think raising the availability fee is an equitable solution. 2. It appears that only one alternative that you proposed lowers the cost for the most impacted citizens in our community. The hardest hit user has already been hurt in this economy. I think it would be wrong to raise their costs and force them to limit essential use or face doing without essential needs. What would happen to the total impact if everyone in the county only used the 4 ccfs across this county? How much money would we save on capacity costs? It would be significant! There are more ways to look at equity than with fancy charts. I think the person who limits their water to only drink, wash clothes, is actually in my opinion, subsidizing the person who wants to pretty yard. I don’t care if they want a pretty yard. How much capacity do we really have to build that is not in this structure? When I look at what you presented, I am disappointed that only 1 alternative lowers the cost for the minimum wage earners. We have to be really careful about the message that we send when we explain how this new rate system would work. I would not do anything that would raise the bottom user’s rates. The availability charge you discussed is just another fee. It’s wrong to look at trying to lower the rate to the person who wants the pretty yard. If they can afford the yard, grass seed and fertilizer, then they can afford the water! 1. Councilmember Nancy Carter asked the rate study team to think about the recessive nature of these alternatives. Recessive in that it hits the lower tier and recessive that it does not increase conservation. Please look at making the availability fee a little higher and reducing the rates, particularly at the lower consumption, to balance it. So that the person who is paying the lower rate is held harmless, but the rate keeps coming across the board. I am not sure of my math, so I am not sure if that would work, but I ask you to please look at it. Q. Would the capacity fee proposed be considered for annexed people? Would that be considered new development? A. When the city annexes an area, depending on the year and the area, often times, most of the people already have city water and sewer. In cases where people don’t have city water and sewer and are on private wells and septic tanks, then we make connection available, if they want to connect to it, and in those cases they pay the capacity fee. In other times, we annex places that already have private wells and sewers systems already installed and in those cases those customers do not pay a capacity fee because we acquire the private systems and just take over the operations. Closing Comments from Barry Gullet: The options and alternatives that we are laying out in these public meetings are the variables. They are the things that we can change in the rate methodology. They are not proposals and should not be interpreted as proposals. We are saying: These are the things that we can change and this is the impact it would have if we changed it. The purpose of these public meetings is exactly what has happened tonight – to hear from you and hear what is important to you. Then we can start looking at combinations of the alternatives and look at how it would impact rates and fit the customer. Next, we will review the public comments that we have gathered in the meeting, through the website and comment cards and craft a set of recommended rate structures that reflects the values of conservation, equity and economic development and the factors that were identified in the first round of public meetings that are important to our customers. So what we are trying to do is craft a rate structure that fits our community, fits our community’s values that encourages the things that our community thinks are important and supports CMU operations.