Wednesday, December 15, 2010

On Meters, Impurities, and Water Rates

In light of recent media interest, I feel to say a word about secondary water rates.

In a November 28 editorial, The Daily Herald likened Pleasant Grove's water rates -- which, like American Fork's, are based on lot size rather than water usage -- unto Obamacare. In this conservative territory, these are fighting words.

The problem with rates based on lot size, says the Herald, is that the cost is the same for any given user whether he waters a lot or a little. This hampers conservation efforts and leads in many cases to inequity. The landowner who puts his entire lot into vegetable gardening pays no more for his daily water usage than his next-door neighbor, with the same lot size, whose yard is entirely paved in concrete.

Moreover, it masks the true cost of water and this, says the Herald, revving up for its tirade against Obamacare, is "how government gums things up by trying to hide real costs."

I follow this logic. I am a card-carrying free-market economist, if there is such a card, and I too believe that price should reflect cost and that secondary water rates, therefore, should be based on metered usage.

So here's the problem. Secondary water comes from impure sources, is not treated, and therefore carries impurities that clog meters. Which means that secondary water can't be metered. Not by ordinary meters, anyway. Special meters do exist, but they can't be read by the City's radio meter-reading technology. Or if they can, they are expensive: $250 per meter. Moreover, the technology is still experimental.

When American Fork bonded for secondary irrigation, that $250 multiplied by 7,000 households city-wide would have meant bonding for an additional $1,750,000 -- money which, given the inherent unreliability of the meters, neither the engineering staff nor the city council could justify.

Thus the rates came to be based on lot size rather than usage.

Nevertheless, the engineering staff has been monitoring the progress of meter technology and does have a few of the expensive meters on hand. Complaining residents whose lots are mostly house, or mostly driveway, have been offered meters to enable them to prove lower usage. They, in exchange, have become the City's guinea pigs.

The meters will see their first full year of use in 2011. After that, the City may choose to re-examine the issue.

But at this point in time, I have to say that fairness is only the lesser of the city council's concerns with respect to water rates. The large, looming concern this year is the possibility that revenues will not be sufficient to meet the payments required on the bonds.

With a good portion of the system's revenue model based on impact fees (fees from new construction), and with construction having come to a near stand-still these past three years, the situation is looking bad. If the situation continues, we, like Pleasant Grove, may be forced to raise revenues through other means -- possibly through increased water rates, property taxes, or through issuing more debt.

This concern is occupying the better part of our attention these days, and the council is doing all it can to minimize the impact. We are working to boost economic development. We have steered away from budget increases and are fighting excessive charges from the sewer district. As long as the water bill continues high, we should be doing all we can to keep the tax bill low.


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