Guest Commentary: Utility rates – ‘Facts over emotion’

In November, the Marco Island City Council voted to spend $50,000 to complete a water and sewer rate study to obtain the impartial facts relating to the usage of water and sewer by customer type, i.e. single family, condominium multi-metered, condominium individually metered and commercial.

To accomplish this goal, they authorized the establishment of a committee of four city councilors and the head of the utility advisory committee (the steering committee) to request proposals from experts in utility cost of service studies. Nine firms responded and the committee unanimously selected Burton & Associates, a nationally renowned utility economic service consultant to perform the study. The founder and lead consultant, Michael Burton, has over 30 years experience providing services to public and private utilities and has written manuals published by the American Water Works Association for utility rate design work.

While city staff and the steering committee are still validating the input data of this study, it appears that some groups of citizens reading the preliminary data do not like what the impartial results may show.

Last week, a guest commentary written by one individual who stated in the article “I would not profess to be remotely knowledgeable about setting rates for water and sewer,” appeared in several newspapers around the island. This guest contributor, president of the Marco Island Homeowner’s Association, established his position that the facts presented to the Steering Committee are not “fair and equitable” to single family home owners and that the City Council should ignore the independent consultant’s recommendation and return to the Utility Advisory Board’s original recommendation to reduce single family rates by 16 percent and increase condominiums and commercial rates by more than 25 percent. It should be noted here, that the Utility Advisory Board is composed of four single-family homeowners and only one condominium owner.

Let’s get the facts straight. Today, according to the usage data supplied by the city staff to the consultant the average condominium on Marco Island is currently consuming 2,000 gallons per month, while the average single family home is consuming 16,000 gallons per month.

Using the above data I would like to demonstrate the fallacy of Mr. Sacher’s argument. You and I agree to buy a 9-bedroom house. You use eight of the bedrooms and I use one; Mr. Sacher’s logic would suggest that since we purchased the home together we should equally share all of the expenses of the house. You can see how this analogy fails the “Fair and Equitable test.”

The reason the City Council voted to hire an independent consultant was to get the real facts. For too long now, misinformation has been floated by various groups on Marco Island to support their positions of how one group of users has been paying too little and another group too much.

This is the first time in the history of Marco Island that an independent and unbiased review of the true cost of providing water and sewer service to all users of the city has been commissioned. We all know the cost of our water and sewer service is high, but we all also know that what this island wants, is to insure that those costs are allocated fairly to all of our citizens.

The most critical element of this issue in front of Marco Island is that once again a group wants to create a “we/they” or “us/them” scenario that is so divisive to a community. Especially when there is a great need to come together to resolve many future opportunities. This will be excessively aggravated if the facts and findings of knowledgeable independent experts are ignored for political positioning.

I am confident our city council will act to implement fair and equitable rates based on an independent report despite the obvious attempt to shield and discredit those facts from others.

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Comments » 9

u2cane writes:

Question: Are you comparing Apples to Apples? Of course a condo is going to use less water. They aren't watering a lawn and they tend to have less space, meaning less people in them consuming water for the most part. A condo tends to be used less than a home would also. I don't know the numbers, but I would believe that condo's are more likely to be weekly rentals which can go unused several days or even weeks if not rented. Condo's aren't going to have individual pools either. Base charges should be the same, because unfortunatley we all depend on the same water to be used. However, when you use more water naturally your bill will be more. However, when you use more you buy more and when you buy more you usually end up paying less because you get volume discounts, correct? I understand that water is precious, and the idea is to conserve, but wouldn't it stand to reason that you would get a better break on the commodity you buy if you buy in bulk? So why would a Homeowner expect to pay a higher rate then someone using less. Yes, your overall bill will be higher, but you are giving the utility (a revenue producing source for most municipalities) a market for their product. It is going to cost the utility a fixed dollar amount to have the facility in place, but the consumption will fluctuate and could determine if they will have to produce more or less product. The more product (in this case water) they produce, the more they sell. If a condo sits vacant, they still have to provide water for it, but if nobody consumes it the utility will be forced to flush the water out of their pipes to comply with the EPA stage 2 rule for dpb's, and that water can't be sold (but will I'm sure be figured back into costs somehow).

Also, if the reclaimed water costs less to make, why aren't pipes run for homeowners to connect to this reclaimed water like in many communities in Florida? Why are only a select few being allowed to partake? That would cut down on the potable water production. Is that the problem, it cuts out their market?

ajm3s writes:

"We all know the cost of our water and sewer service is high, but we all also know that what this island wants, is to insure that those costs are allocated fairly to all of our citizens."

So may I ask who is to pay for the 2.2 MGD that is above and beyond capacity that is not used today. Currently, the COS burdens that cost including debt on existing users of water.

Why should I pay for extra capacity that I am not using, nor will use even when the city is built out according to the existing master plan?

Answer: By allocating costs on existing users apportioned by use, all vacant and future use lots do not pay the current borrowing and capital costs for the benefit of having a hook up to a system with excess capacity.

Unless of course, there is a plan to use this excess capacity for high rises and expansion of multi-unit dwellings beyond the current master plan. Because all the lots if developed with single family residences could not exhaust this capacity. So it must be for something else?

So is there a future agenda we are not aware of? If so should those potential users be assessed for their portion of capacity? But they currently do not use any water, so by COS standards they do not pay anything for this expansion or benefit.

So I guess it will be apportioned with the brunt on single family homes. Remember, the STRP front loaded assessments on all properties with existing septic tanks, so why not the same be assessed for current non-users of water/sewer i.e. vacant lots?

But does it matter, because the direction is less affordability due to over spending on over capacity. And the users get to pay for it. Thank you again.

Is that not fair and balanced? I guess one option is to do a tear down to add to the population of vacant lots and attract burrowing owls.

Another option, for SFR is to simply not water your lawn. Now that is an image I can see developing now, and we have not even begun to adjust rates "equitably".

Ah, the wonders of supply and demand from a government run enterprise.

blogsmog writes:

does anyones throat get sore when drinking marco water, either filtered or unfiltered?

captnjimbo writes:

When Council was considering action before a study I became alarmed and wrote each council member and copied the press trying to make sure they got the facts. I am an ex-officer of an association that indeed does have a lawn and keeps it as lush as we are allowed. I agree with almoast everything Don has put in his letter except perhaps the averages of useage...where I live we are vacant most of the year...but then again, so are most of the homes.

Now that we have the facts, I don't care if the council does a little smooting but because so many condo owners are absent and thier priorities are somewhere else my biggest concern is condo owners...who pay a ton of taxes here...would be taken advantage of...an unfair distribution would certainly arouse a sleeping giant...and armed with the facts from a very respected consulting group would result in a class action if there was abuse.

I believe armed with the facts our representatives will do the right thing.

Ocram (Inactive) writes:

in response to u2cane:

Question: Are you comparing Apples to Apples? Of course a condo is going to use less water. They aren't watering a lawn and they tend to have less space, meaning less people in them consuming water for the most part. A condo tends to be used less than a home would also. I don't know the numbers, but I would believe that condo's are more likely to be weekly rentals which can go unused several days or even weeks if not rented. Condo's aren't going to have individual pools either. Base charges should be the same, because unfortunatley we all depend on the same water to be used. However, when you use more water naturally your bill will be more. However, when you use more you buy more and when you buy more you usually end up paying less because you get volume discounts, correct? I understand that water is precious, and the idea is to conserve, but wouldn't it stand to reason that you would get a better break on the commodity you buy if you buy in bulk? So why would a Homeowner expect to pay a higher rate then someone using less. Yes, your overall bill will be higher, but you are giving the utility (a revenue producing source for most municipalities) a market for their product. It is going to cost the utility a fixed dollar amount to have the facility in place, but the consumption will fluctuate and could determine if they will have to produce more or less product. The more product (in this case water) they produce, the more they sell. If a condo sits vacant, they still have to provide water for it, but if nobody consumes it the utility will be forced to flush the water out of their pipes to comply with the EPA stage 2 rule for dpb's, and that water can't be sold (but will I'm sure be figured back into costs somehow).

Also, if the reclaimed water costs less to make, why aren't pipes run for homeowners to connect to this reclaimed water like in many communities in Florida? Why are only a select few being allowed to partake? That would cut down on the potable water production. Is that the problem, it cuts out their market?

U2,

Very well said. Do you think you will get an honest answer and satisfactory response from City Council? Think again.

loscabos writes:

The battle lines are being drawn. When the distorted rehtoric is removed from the cost of savings report, remember this...single family homeowners are paying more for a gallon of water then condo owners. It is that simple! Any council member voting for this unfairness must be voted out in the next election. It is our only way to rid the Island of corruption.

marcofriend writes:

Let's do our best not to make this another "us against them" issue. Remember that some group whether in Condos or Single Family Homes are going to be hurt because this whole thing has been done wrong from the start.

For Condo Owners, please remember the false promises made to you in the past about your rates skyrocketing unless the STRP is passed and the 3000 homeowners are charged an impact fee to rebuild the new waste water plant and Homeowners remember that this is a good chance to rectify some wrongs without purposefully causing a problem for anyone.

First things first and that is to remember next year during elections who managed to keep those hidden maintenance dollars away from public eyes until now. We need a complete changeover and more importantly we need to refigure this whole water/wastewater plant issue.

It is draining us all dry. We are building a plant much larger than we need just so certain groups in the community can make more money when they can build more condos, mixed-use units, and hotel/motels.

Let's try to downsize this mess; we don't need the capacity that it puts out. You use less water, your bills go up, you use more water, your bills go up (just to pay of the bond premiums).

We need to split the debt equally between all users. Homeowners pay for sewer even when away because they need to fill pools and irrigate lawns. Condo owners have the luxury of having their waste metered. Condos have reuse water for irrigation. Homeowners water with potable water.

My point to the above is that we will all be in pain for a while, but perhaps if we put in new leaders and we downsize the plants and their production capabilities, then we all can begin to benefit.

This is not easy or fun for anyone. We all got screwed and we all are going to pay the price.

ajm3s writes:

in response to marcofriend:

Let's do our best not to make this another "us against them" issue. Remember that some group whether in Condos or Single Family Homes are going to be hurt because this whole thing has been done wrong from the start.

For Condo Owners, please remember the false promises made to you in the past about your rates skyrocketing unless the STRP is passed and the 3000 homeowners are charged an impact fee to rebuild the new waste water plant and Homeowners remember that this is a good chance to rectify some wrongs without purposefully causing a problem for anyone.

First things first and that is to remember next year during elections who managed to keep those hidden maintenance dollars away from public eyes until now. We need a complete changeover and more importantly we need to refigure this whole water/wastewater plant issue.

It is draining us all dry. We are building a plant much larger than we need just so certain groups in the community can make more money when they can build more condos, mixed-use units, and hotel/motels.

Let's try to downsize this mess; we don't need the capacity that it puts out. You use less water, your bills go up, you use more water, your bills go up (just to pay of the bond premiums).

We need to split the debt equally between all users. Homeowners pay for sewer even when away because they need to fill pools and irrigate lawns. Condo owners have the luxury of having their waste metered. Condos have reuse water for irrigation. Homeowners water with potable water.

My point to the above is that we will all be in pain for a while, but perhaps if we put in new leaders and we downsize the plants and their production capabilities, then we all can begin to benefit.

This is not easy or fun for anyone. We all got screwed and we all are going to pay the price.

Excellent! Your point is well placed. I for one am beginning to get a handle on this COS, although I will admit I would love to have the spreadsheet to play what if scenarios.

I am still trying to assess a "fair and unbiased" approach to apportionment. Where I get a bit fuzzy, is how to share the "over capacitance" or put another way, the larger than needed capital expenditures to meet current use. And I understand the impact of existing impact fees collected after new sites connect, but I cannot figure a way to distribute the "over capacitance" now, other than to distribute it across all properties regardless of use. Because if I heard the capacity of the waste treatment plant, it far exceeds the requirement if every single family lot was built out. Maybe I am thinking too much.

Do we than create an assessment tax to pay for over capacitance, rather than allocation via water and sewer rates for a subset called water and sewer users only. Oh how lucky we are to be in this subset.

And if we do the numbers, will it make much of a difference?

Sorry for this typing while thinking out loud, but the COS provides a methodology to ascertain apportionment based on cost of service, but the council will now have to deal with policy making which may be different if you follow my thinking to apportion not only on users due to cost of "over capacitance".

On that basis, I guess I am falling back to the last proposal brought forth by the UAB or some variant. Because in a nutshell, you front loaded the cost of service with a larger facility than needed and then unloaded on current users only.

Remember, impact costs are only collected when you connect on future water hookups, but strangely, the STRP front loaded septic tank replacement to homeowners to pay for a plant that is larger than needed?

Is that fair? Or maybe I need more tutoring?

happy6 writes:

simple solution...2 meters...1 for lawn, 1 for house...but these morons will never do that like all other cities have done

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