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Clean Water Advocacy - Newsroom - AMSA in the News

Water, Wastewater Rate Increases Help Systems Pay for Improvements

Utilities are turning more and more to increasing the price of delivering water and wastewater services, according to groups. The trend is not just a U.S. phenomenon as many utilities in other countries also feel they must charge more for water. Wastewater facilities are increasing rates 2 percent to 3 percent more than inflation based on data collected in a 2002 survey by the Association of Metropolitan Sewerage Agencies (AMSA), said Adam Krantz of AMSA. The organization plans to release results from its current survey sometime next year, but he does not see much of a change.

"Without dedicated federal funding to protect water ways and watersheds, utilities are limited to raising rates, using the bond market and going into debt, to pay for regulatory improvements and capital improvements," he told CWR.

Some wastewater facilities have had to increase their rates by 30 percent for capital improvements and regulatory demands.

Wastewater plants are not alone. Water agencies also have turned to increasing rates to make ends meet.

"Water systems have to raise rates eventually. How and when they are raised is dictated by local situations," said Michael Arceneaux, deputy director of the Association of Metropolitan Water Agencies (AMWA).

Utilities raise rates to fund improvements to aging treatment or underground water distribution systems. They also raise rates to keep up with inflation or to meet regulatory requirements.

While utilities use rate increases and will continue to do so, they do not always generate enough revenue to relieve budget shortfalls. For example, industries could leave cities if water and wastewater rates get too high. People could conserve water to the point that the city would not generate any extra revenue from the rate increase, Krantz said.

While Gilbert, Ariz., Water and Sewer plans to increase its rate by 5 percent this year, the increase is misleading, said Greg Svelund, spokesman for the utility. The water and sewer rates are adjusted every year for current capital projects. In the last two years, rates actually decreased as capital projects were cancelled or completed.

"We have a trust fund that covers all necessary upgrades and capital projects. We have to look at the needs at the time and decide how much money we need to pay for those projects. We change the rate to address the needs," he told CWR.

La Grange, Calif., will increase its rates for the first time since 1927 when it charged $1.50. The town now plans to charge a $20 monthly fee and additional charges based on metered use. Residential and commercial customers will pay the same flat fee plus metered use.

Cost of Water Going Up Worldwide

Rate increases have started to occur overseas. Some areas that never had a water fee are starting to use them. For example, because water and sewer service has drained the budgets of Ireland officials, the legislature introduced a fee for the first time, but Northern Ireland parties are against the measure. The fight over metered rate for water and sewer goes back to 2001 and continues today.

In Australia, households pay a surcharge on excess water use. Homes that use more than 400 kilolitres of water a year pay a higher fee than those who use less.

Canadian Premier Dalton McGuinty raised taxes to protect drinking water and public health. The country must deal with a $6.2 billion deficit to pay for environmental and health services.

Rate increases likely are going to continue in the coming years as budgets get tighter and revenue gets lower.