Delving into water rates
City Hall is planning to undertake a study of Santa Fe’s water rates.
Don’t panic yet. Mayor Alan Webber says there’s no preconceived goal — like rate increases or shifting the burden among different kinds of customers, such as residential versus commercial users.
The mayor and the city’s water chief portray the study as more or less routine, something that needs to be done from time to time and also as part of Webber’s plans for assessments of most departments as his administration, still less than year old, tries to make city government work better.
The resolution proposed by the mayor and headed to the City Council says a task force would “evaluate the current water rate structure to ensure the rate structure supports the capital and operational costs of the water utility, and that those costs are distributed between rate classifications that align with the overall vision and mission of the utility and the city of Santa Fe.”
Webber said he wants to ensure that city policies correlate with goals like water conservation, affordability for families, and supporting economic opportunity and Santa Fe employers.
Santa Fe’s residential water rates per gallon went up to among the highest in the country, maybe even THE highest, after a series of annual rate increases peaked out in 2013. The good thing is that since Santa Fe uses so much less water than most cities, average household bills continued to be moderate, national surveys showed. The City Different’s status as among the leaders in encouraging low water usage in a dry climate has earned national notice.
So, is a water rate study now an example of “if it ain’t broke, don’t fix it?” Probably not.
Up-to-date comparisons on how well Santa Fe stacks up with other cities in the rates/water savings area have become a bit more difficult as communities, particularly in the West, recently have implemented a variety of rate plans intended to encourage residents to be water-thrifty. Maybe that’s an issue Webber’s Forward Look on Water (FLOW, get it?) task force can delve into.
Santa Fe pushes water savings with a tiered system — the per-gallon rate more than triples after monthly use of 7,000 gallons in the winter or 10,000 gallons in the summer. Average usage is about 5,000 gallons a month.
As the water rates went up a few years ago, the Water Division’s reserve fund ballooned to $95 million, even as the city paid off construction of its water diversion facility on the Rio Grande. City Hall’s leaders questionably raided the water fund to finance other parts of city government. The reserve fund is now $47 million after some debts were paid and others were refinanced.
Here are a few ideas for the water rate study:
Consider additional tiers of residential rates, including one on the low end for households that use very little water, further encouraging water savings and rewarding those who do the best job at it. And on the high end, does there need to be an even sharper sting for household customers whose water usage is really, really off the charts, with the message being something like “keep the swimming pool, but finally make the switch to xeriscaping and native plants, for God’s sake.”
The downward pressure that rates can put on water use might need to be ramped up more generally down the line as drought conditions persist in our region, but higher rates for bottom-tier users now would need some really strong justification. Santa Fe’s per-capita water use has dropped consistently over the years, and is well below that of other New Mexico and Western cities. Residents in general are already doing their part.
The city needs to determine how much of a money reserve the Water Division really needs to provide for future city growth, prepare for emergencies or increase incentives for water-saving appliances or other measures like diverting rainwater or gray water to household uses. The revenue generated by rate increases phased in through 2013 obviously exceeded what was needed to cover ongoing operating and capital costs, since there was money left over for non-water-related city expenses. If the city wants to fund general government services with water rates, it should be honest about it and have a community discussion on that issue.
Webber’s mention of wanting the study to consider water rate impacts on economic opportunity and employers raises some interesting issues. Do commercial rates need to be adjusted? If they go down, does another class of users need to pay more, or do some business categories need to pay more and others less?
Stay tuned. And don’t leave the water running.