DWSD Plans to Offer Tiered Pricing for Water

The Detroit News reported yesterday [2/2] that the Detroit Water and Sewerage Department is planning to roll out a tiered billing system that would offer residents and businesses a lower rate on the first 1,500 gallons used per month. Consumption above that amount would be charged at a higher rate. 

Details, including the actual rates being proposed, have not been released.

Note: It is unclear whether rates for sewerage, which are generally tied to water consumption, would be included in the new tiered rate plan. The Detroit News also notes that the proposed block method of billing could shift $5 to $7 million dollars of water cost from residential to business and commercial customers. 

Along with DWSD's new drainage charge (what some have dubbed a "rain tax") that was rolled out last October, adding $750 per impervious acre per month to many business and commercial property owner's utility bills, higher water rates to subsidize residential customer rates may not be welcome news.
 
For more about DWSD Update, click here.  

New Program to Keep the Water Running, Receives $1 Million Donation

With about 21,000 residents due to receive shut-off notices, the Detroit Water and Sewerage Department (DWSD) announced over the weekend that The Heat and Warmth Fund (THAW) had received a $1 million donation  aimed at helping City residents pay their water bills. 

The money was donated by Miller Buckfire, a New York investment firm that help shepherd Detroit through its historic bankruptcy in 2013-14 and earned $22 million in fees.

According to CEO, Saunteel Jenkins, the donation will be used for THAW's Water Assistance Program, which will launch on June 1, 2015. The program will pay up to $2,500 per household for families that are subject to shut-off and have incomes at 200% of the federal poverty level.  The new program will help about 1,000 families. 

News reports here indicate that Miller Buckfire's donation was part of a settlement it reached in December, 2014 with the City of Detroit, which had disputed its fees as part of the City's Chapter 9 bankruptcy proceeding. During mediation ordered by Judge Rhodes, Miller Buckfire reduced its fees from $28 to $22 million. 

Comment: I don't mean to diminish this significant contribution, but helping 1,000 families accounts for less than 5% of the households facing shut-off. There is nearly $49 million owed on delinquent accounts. There simply has to be a better long-term solution to the City's residential water needs.

For more about DWSD Update, click here. 

Water and Sewer Rates to Rise Again

On June 15, 2010, the Detroit City Council narrowly approved water and sewer rate increases for the suburbs and Detroit by a 5-4 vote. For suburban customers of the Detroit Water and Sewerage Department, the average increase ranges from 8.8 percent to 9.7 percent.  For Detroit residents, the average increase will be 8 percent, or about $3.97 more per month. The rate increases are effective July 1, 2010. 

DWSD Water and Sewer Rates to Increase (Again)

DWSD's rate consultant, Bart Foster, reports that declining water consumption is the key variable driving this year's proposed 9.5% in Metro-Detroit water and sewer rates.  Declining revenue was also a key factor in DWSD's decision last year to delay construction of new water mains into Genesee County. The other critical factor was Genesee County's announced plans to build their own water system.   

Water Consumption Continues to Decline, Rate Increases Predicted

The Detroit Water and Sewerage Department reports that water consumption in 2008 fell 12%, or about 16 billion gallons. From 2007, water consumption has dropped 15%, or 23 billion gallons.

Due to DWSD's significant fixed costs, including bond debt and other fixed operating costs, a significant decline in water consumption (revenue) will mean that rates for next year are bound to increase even more than usual.

And as we reported last December, a decrease in water revenues may contribute to further delays in court-ordered improvements to DWSD's system. Earlier this year, DWSD canceled two major tunnel contracts -- the Upper Rouge Tunnel and the Detroit River Outfall (DRO) Contract No. 2 -- worth over $600 million on grounds that they were too costly. Many other projects, which were slated for bidding earlier this year have been delayed.

Detroit City Council Approves Rate Increase, Reluctantly

Just 2 days after it rejected an increase in rates, the Detroit City Council earlier today voted today 4-3 to approve an 8% hike in water and sewer rates. Monica Conyers, who voted against the increase on Tuesday, was absent for today's vote. Reports the Detroit News --

The Detroit City Council today passed a water rate increase, averting a potential move by a U.S. District judge to unilaterally set higher rates for 4 million customers in 126 communities.

Customers are set to see bills go up about 8 percent, an amount Detroit Water Department officials say is needed to bolster declining revenues and counter surging interest rates on money the system has borrowed for capital improvements.

The measure passed in a 4-3 vote this afternoon. Members JoAnn Watson, Kwame Kenyatta and Brenda Jones continued their stance on not supporting the proposal that hurts city residents who are facing substantial financial issues. Monica Conyers, who voted against the measure Tuesday, was absent, as was Martha Reeves.

For the complete story, click here.

Water, Sewer Rate Increase Rejected by City Council

Earlier today, Detroit City Council rejected the 2009-2010 rate increases proposed by the Detroit Water and Sewerage Department. In March, DWSD proposed 5.1% water and 15.8% sewer rate increases for Detroit residents. Suburban customers would see wholesale increases of 8.9% for water and 2.4% for sewer rates.

One alternative for DWSD would be to request the U.S. District Court to order a rate increase. Judge John Feikens, who has had superintending control over the Department since 1977, has previously allowed DWSD to by-pass the Detroit City Council on such matters as approval of contracts.

Water Demand Drops -- May Affect Rates, DWSD Construction Plans

The Detroit Free Press reported on November 30, 2008 that a drop in the demand for water among City and Suburban users may contribute to an increase and water and sewer rates by DWSD:

"Detroit officials are expected to raise water rates 6% to 10% and sewer rates by as much as 13% to 17% next month, according to some suburban leaders who have met with the department.

"The revenue dip was enough to prompt U.S. District Judge John Feikens to schedule a hearing for Tuesday [December 2, 2008] to hear how the water department and others in the region plan to deal with it.

* * *

"Feikens, who has ordered hundreds of millions of dollars in improvements to the sewerage side of the system to bring it into compliance with the Clean Water Act, said revenue is needed to fund those projects.

"If a revenue stream is affected by a certain percentage, there are rules in the Clean Water Act that say some projects may not be economically possible," Feikens said.

"It isn't yet clear whether the revenue picture is bad enough to consider such delays, Feikens said."

Comment: This article, and Judge Fekeins' comments, appear to be a reference to several ambitious, and expensive, water transmission projects announced earlier this year by DWSD, the North Oakland Transmission and Flint Loop projects, bids for which have already been delayed once, and could be delayed into 2009.