Explanation
BACKGROUND:
The Department of Public Utilities entered into contract in 2006 for development of updated rate models for the Division of Sewerage and Drainage and the Division of Water. This was the first major review and rewriting of rate models since 1993. The new models follow accepted design practice and fully account for changes in operations and asset valuations for each division. Customer cost of service was established and cost of service rates established for each customer group. Combined with modifications in System Capacity Charges the overall increase in revenue to the Division of Water is estimated to be 9%.
The proposed rate configuration for 2006 recognizes that water utility charges disproportionately effect lower income groups and establishes a Low Income Discount program that discounts participant's water commodity portion of their quarterly bill by 15%.
The rate structure proposed also recognizes that cost of service rates establish that residential water rates have for some time resulted in those customers bearing an unfair proportion of the total revenue burden. Adjustments in rates result in a typical inside city residential water rate increase of 1.83%. When a sanitary sewer increase of 17.2% and a Stormwater increase of 5% are considered the overall impact on a typical residential customer in the City of Columbus is 10.14%.
FISCAL IMPACT: The Division of Water expects an increase of 9% in overall revenue.
Title
To amend Chapter 1105 of the Columbus City Codes, 1959, as it relates to 2005 water rates for customers of the Division of Water by enacting new Sections 1105.041 and 1105.21 and amending Sections 1105.04, 1105.05, and 1105.055; and to repeal all existing sections being amended.
Body
WHEREAS, it is necessary to establish new water services rates, effective January 1, 2006, for water service provided by the City of Columbus in order to recover the cost of rendering said water services for the calendar year 2006; and
WHEREAS, the City of Columbus, Department of Public Utilities Division of Water needs a nine percent (9%) increase in revenue in 2006 to pay for necessary ongoing operations and needed improvements; and
WHEREAS, the City of Columbus is committed to establishing its rates based on a Cost of Service basis, where the rates charged to customers are based as closely as possible on the cost of servicing that customer. The rates established herein are based on a rate study that used the cost of service methodology; and
WHEREAS, City Council finds that it is appropriate to include a Lifeline Rate, or inclining block rate, in the water rate structure. The Lifeline Rate will bill residential customers a commodity fee based on the amount of usage, with the first block of usage billed at a lower rate, with higher usage billed at a higher rate. This Lifeline Rate will encourage conservation, and make the most essential water usage more affordable; and
WHEREAS, City Council finds that a declining block structure is more appropriate for commercial and industrial customers, as it encourages economic development. The existing declining block rate for industrial and commercial customers will therefore be retained; and
WHEREAS, the City has wholesale contracts with other municipal entities. These wholesale contracts, or suburban master meter contracts, serve a blend of residential, industrial and commercial customers, which blend should be reflected in the charge in these contracts; and
WHEREAS, the City has consecutive water systems customers which purchase bulk water and distribute it to their own customers. These consecutive water systems serve principally residential consumers including apartment complexes and residential subdivisions. These consecutive water systems should be charged at the rate it costs to serve them.
WHEREAS, City Council recognizes that increased water rates disproportionately impact low income residents. Low income residents already pay a higher percentage of their household income in utility bills, and this percentage would increase with higher rates; and
WHEREAS, City Council further recognizes that past rate increases in the City have demonstrated that increasing rates leads to increased delinquencies among the City's customers; delinquencies rates are higher among low income residents. It is well recognized that increased delinquencies are expensive for the City and its customers; and
WHEREAS, City Council finds that adopting a discounted rate for low income users is a recognized method for helping to alleviate the impacts of increased water rates; and
WHEREAS, the Sewer and Water Advisory Board has adopted recommendations that are consistent with the rates established in this legislation; and
WHEREAS, City Council finds that the rates and the low income discount established herein are equitable to all of the City's customers; now therefore
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
Section 1. That the existing Section 1105.04 of the Columbus City Codes, 1959, shall be and is hereby amended to read as follows:
1105.04 Residential Inside city water rates.
The charges for Residential water supplied through meters to consumers within the corporate limits shall be based upon a service charge plus a commodity charge. The following rates shall apply to Residential water services within the city: (SEE ATTACHED SPREADSHEET)
Section 2. That Section 1105.041 be established as follows:
1105.041 Commercial and Industrial Inside city water rates.
The charges for Commercial and Industrial water supplied through meters to consumers within the corporate limits shall be based upon a service charge plus a commodity charge. The following rates shall apply to Commercial and Industrial water services within the city: (SEE ATTACHED SPREADSHEET)
Section 3. That the existing Section 1105.05 A and 1105.05 B of the Columbus City Codes, 1959, shall be and is hereby amended to read as follows:
1105.05 Outside city water rates.
A. For areas covered by retail contracts: the outside city rates shall be the total obtained by adding the inside city rates and the percentage increase or additions specified in the contract. If no percentage is specified in the contract, the outside city rates shall be the inside city rates multiplied by one and three tenths (1.3) in accordance with the following schedules: (SEE ATTACHED SPREADSHEET)
B. For noncontract areas or areas where the contract has expired: the outside city rates shall be the inside city rates multiplied by one and one-half (1.5) in accordance with the following schedule (SEE ATTACHED SPREADSHEET)
Section 3. That the existing Section 1105.055 A of the Columbus City Codes, 1959, shall be and is hereby amended to read as follows:
1105.055 Outside city mastermetered contract water rates.
A. For areas covered by wholesale mastermetered contracts: the rates shall be as follows: (SEE ATTACHED SPREADSHEET)
Section 4. That Section 1105.21 be established as follows:
1105.21 Low Income Discount for Commodity Charges
(A) For purposes of this section, "low income residential customer" is defined as a direct residential customer of the City (whether inside the City or outside the City) who is eligible for food stamp benefits, Ohio Medicaid, Low Income Home Energy Assistance (LIHEAP), Home Energy Assistance (HEAP), Ohio Works First, social security disability, public housing benefits, Homestead Exemption or any other state or federal low income assistance program acceptable to the Director.
(B) All low income residential customers may receive a fifteen percent (15%) discount on the commodity portion of their water bill. This discount will be available to the low income residential customer upon application to and approval of the Department of Public Utilities.
(C) The director may adopt regulations necessary to administer and enforce the provisions of this section. Regulations promulgated, pursuant to this chapter by the director shall be published in the City Bulletin, with copies of the regulations being available for public review at the director's office and other locations which may be designated by the director.
(D) Columbus City Council charged the Department of Public Utilities to develop a tiered system to provide low-income users financial relief, in light of the rate increases that are mandated by federal clean water standards. Council appreciates the great progress made. However, more needs to be done to ensure that low-income residents who are not direct utility system customers have the same opportunity for discounts and financial relief as available to low-income residents who are direct users. To that end, the Public Utilities Department shall convene a task force within thirty days to study ways to provide assistance to low-income indirect users, and to provide City Council with recommendations no later than sixty days thereafter.
Section 5. That water rates herein established shall be applicable to all water used on or after the effective date of this Ordinance.
Section 6. That this Ordinance shall take effect and be in force from and after the earliest period allowed by law.