Tuesday, March 23, 2010

Open thread: Kat330's explanation of NAMU's "discriminatory rate system."

The following was submitted by kat330 (Kathleen). I've tried as best I can to make it look sensible on the page. Blogger sure doesn't make it easy.

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Graphically explaining the issues of discrimination and conservation disincentive within New Albany Municipal Utilities wastewater charges

SAMPLE FROM NAMU's CURRENT WASTEWATER RATE CHART

Wastewater Charge ÷ Units Used = Rate Per Unit

20.16 ............... 4 ............... 5.04

15.12 ............... 3 ............... 5.04

10.08 ............... 2 ............... 5.04

10.08 ............... 1 ............... 10.08 [5.04 + 5.04 surcharge]

Leaving 0-unit usage out of the sample for the moment (since you can't divide or multiply by "0"), it's crystal clear from the above how any "base access" or "minimum use surcharge" -- whatever you dub it -- is currently the burden only of NAMU customers who strain our city's pipes and system the very least. Every billed customer at a usage level of 2 units (plus) pays only in parity with exact usage except for the bottommost tier of zero and 1-unit users. This constitutes a completely regressive and discriminatory billing system, which piles all additional costs onto one group of highly responsible consumers (1-unit) and on vacant properties (0 units).

The argument presented by Skomp at a sewer board Mtg. on 3/11/10, and repeated by others, is (to paraphrase) "NAMU [and/or EMC] requires this extra minimum revenue to help pay for the system." That's precisely why a connection / access fee shared by every customer from the very beginning would have resulted in far more revenues collected, obviously, from the full 17,000 customer base instead of 2-3,000 customers at most. More importantly, this much more common base fee billing system would have been non-discriminatory over all these years and, more importantly, the current dire need of a 36% rate hike would be mostly, if not entirely, nullified. A simple computer algorithm would probably reveal that nothing more than tiny increments in unit rates above a shared access fee would have been needed in 2010 if a fair system had been put into place from the beginning.

Now over on the NA Confidential blog, we observed a number of 3-unit users wrote in their comments how "fair" and perfectly reasonable 15.12 was for their wastewater charges. That's because it is for you! If in this city you use 2, 3, 4, 5 and on up to whatever ceiling of unit usage exists, your costs match up exactly to what you consume and not a penny more. So let's graphically show a switch up on the current NAMU sample above by removing that 5.04 surcharge from the 1-unit users and instead tack it onto you 3-unit users. It would look like this:

Wastewater ÷ Charge Units Used = Rate Per Unit

20.16 .............. 4 ............... 5.04

20.16 .............. 3 ............... 6.72

10.08 .............. 2 ............... 5.04

5.04 ............... 1 ............... 5.04

This new rate chart points up several interesting facts. First off, the surcharge added at the 3-unit level divides out to far less of an overcharge per unit (6.72) than how it currently divides for usage of 1-unit (10.08). Also, since the NAMU customer base contains many more billings of 3 units than it does of 1 unit, the collected 5.04 from each in the above group would be a tremendous boost to revenues over what's currently collected on the backs of 1-unit users. And again, a simple spreadsheet program could pinpoint which usage group is the most prevalent in any given month from among the 17,000 total and randomly stick that 5.04 surcharge onto that most common usage billing. After all, if it is not being considered discriminatory when it's added to the bottom usage tiers, then how could it be considered unfair when tacked onto 3- or 4- or 5-unit users?

Here is what else this "walk in our shoes" surcharge switcheroo can demonstrate. Okay now, all of you "happy what you pay" 3-unit users out there: How happy would you be to pay 20.16 for your 3 units of usage when you know the guy next door uses 4 units and pays exactly the same as you do for wastewater? Do you think he would wash his car more efficiently or wait for full dishwasher and laundry loads in order to conserve down to your 3-unit level when he knows he'll pay exactly the same for 3 as he already does for 4? Unless he’s the greenest of the green and among the most responsible, conscientious citizens the city has, of course not. On the other hand, do you think you might develop more wastrel behaviors since you wouldn't pay any more for consuming that additional unit?

Fact is, citizens, I couldn't find another example on the Internet of a comparably-sized municipal utility with a "minimum use" billing system in 2010 that places extra charges solely on the bottom tiers of the customer base. Duke, Vectren, AT&T and Indiana American Water all use a base fee after which customers pay equitably for their usage on 1 for 1, 2 for 2, 3 for 3, etc., basis. Does an access / connection fee system still burden the lowest consumer of any service? Yes, it does. But at least these other utilities don't charge the customer who uses 1 unit twice as much for that unit as the customer who uses 2 units, which NAMU currently does. Our Indiana American Water bill, et al, is not identical when consuming 0, 1, or 2 units in any given month -- it's progressive in costs -- but our NAMU bill is identical in those three different usage groups.

If you want to see a 21st century wastewater billing system that wisely, progressively and greenly goes several steps beyond even the base fee system we're advocating, then check out this URL for Minnetonka, MN (comparable in size to what New Albany was before further losing population).

And at this URL, you can see what class action sewer suers can accomplish against rate discrimination.

Take and give care, and try always to be fair.

24 comments:

Randy said...

I had no trouble understanding it the first time. What I would rather read is an apology from Kat...and Gina, too.

Jeff Gillenwater said...

I suppose we were supposed to look at Minnesota water billing while ignoring the sewer billing.

Pointing this out will probably lead to charges of something or other but, if one looks at the Minnetonka example provided, they'll see that Minnetonka has a policy of billing residential sewer users for a monthly minimum of 15,000 gallons at $2.79 per 1,000 gallons.

In New Albany (1 unit = 750 gallons), 15,000 gallons would be 20 units. If we were to implement the Minnetonka policy, anyone who used between zero and 20 sewer units would be charged the same amount, $41.85.

Only senior citizens would be given a sewer break, as a function of age rather than usage or income.

Those who conserve water in MN might save a small amount but that savings plus a lot more would be recaptured in the sewer billing process.

Jeff Gillenwater said...

Fact is, citizens, I couldn't find another example on the Internet of a comparably-sized municipal utility with a "minimum use" billing system in 2010 that places extra charges solely on the bottom tiers of the customer base.

Not only does Minnetonka, MN, do it as shown but I found another example in the first place I looked: Columbus, Indiana.

In Columbus, those who use 10,000 gallons of water or less are charged $1.61 per 1,000 gallons. Once past that 10,000 gallon threshold, the rate per 1,000 gallons decreases so that the overall price per gallon used goes down as well.

The same is true of their sewer system. It's $6.67 per 1,000 gallons for the first 10,000 but then decreases per gallon after that.

The reality in Columbus is that those who use less pay a higher per gallon charge.

Unknown said...

And I would rather read comments that are not blanket statements on behalf of everybody else, or a statement that actually addresses the issue instead of clouding it.

Let's make it simple:

Would you prefer that those who use more water, and thus tax the system and resources, pay more for their usage? Or should they pay less?

I have no agenda here that would benefit myself, but I would be happy to pay more than I do now to support water conservation and fairness. It's a small step towards a progressive system that would help the system, the city and its inhabitants in the long run.

Iamhoosier said...

I don't think that you will find many(if any)that comment here who will disagree with fairness and conservation. Or paying more if that is what it takes to accomplish those goals.

Jeff Gillenwater said...

Would you prefer that those who use more water, and thus tax the system and resources, pay more for their usage?

Yes. With the exception of EDIT subsidy, I think our current billing system accomplishes that to a reasonable degree while maintaining the overall system for use. It's certainly much more equitable than many of the examples provided as better.

Iamhoosier said...

"Fair" is not an absolute.

SBAvanti63 said...

I'm guessing that sales taxes and property taxes should be reduced for people with no children, too.

knighttrain said...

Kathleen, I agree. I use less than 25 gallons per month (sometimes zero) at a house I own. A lot of people conserve and get nothing for the effort. All of the so called "numbers guys" here will not let go. Of course there is no accurate measure of how much wastewater goes into the system. No house puts in as much as they buy from any water company.

G Coyle said...

watch out knighttrain...you've sounded the war cry here!!

For those not consumed by conspiracy theories I've also posted a follow-up to the rate structure question at my blog http://letterfromnewalbany.blogspot.com/

Daniel S said...

From tonight's meeting. Crowe Horwath lady said that they did an initial study. Based on just debt service owed by the utility, if they charged a base fee to cover that instead of minimum use fee, every customer would have to pay $25 a month plus their usage.
If you trust Volunteer fans, and why would you, er shouldn't you, Randy was there and can fill you in with the rest of the base fee talk.

Randy said...

Daniel's report is accurate. You can do the math yourself. Take our sewer debt service, divide by the 16,500 accounts, and you'll get a number in the neighborhood of $25 a month. That's the cost per subscriber just to have a sewer system in 2010.

Be careful what you wish for. Still waiting on those apologies.

Go Vols. Looking forward to the rubber game on a neutral court in Indianapolis. UK would be favored by 9, I guess.

Jeff Gillenwater said...

Duke, Vectren, AT&T and Indiana American Water all use a base fee after which customers pay equitably for their usage on 1 for 1, 2 for 2, 3 for 3, etc., basis.

This isn't true, either. Duke, Vectren, and Indiana American Water all provide discounted per unit charges to high volume customers not given to low volume customers so that high usage results in lower overall per unit costs. AT&T charges a flat rate for unlimited local calling so customers there, too, are actually rewarded for using the infrastructure more.

Why are these used as examples of more equitable methodology when their billing schemes are fundamentally more regressive than the New Albany sewer system's?

On a very practical level, isn't it possible, rather than refusing to "let go", that some aren't as outraged as Kathleen would like them to be about this particular topic owing to their recognition that the New Albany sewer billing system is less regressive than several others to which they're subjected?

G Coyle said...

$25 is less than I pay now.

Randy said...

$25. Plus your wastewater/water usage at 100 c.f/750 gal. What's your point? Whatever the rate, it's doubtless your cost would rise. To whom would your increased payment accrue benefit?

Iamhoosier said...

Knighttrain,
That still begs the question, how much should the charge be for the sewer "just being there"?

Gina, you are being just an unfair as you are accusing others of being. And you know that you & I have often agreed on some topics here both publicly and privately. Most of the disagreement has been fairly civil--especially by NA standard--heck by NA standards it's been milk and cookies.

Kathleen,
What is it that you want? Your arguments run the gamut. As Jeff pointed out, you cite examples that that actually discourage conservation. That leads me to believe that isn't your intention. On the other hand(there you go Randy), J.T. says it isn't about benefiting himself. I used an example the other day of a "true" base rate and usage charges from the first drop. You said that I didn't know basic math. Now, never mind that you didn't bother to point out my error, what I read now from you seems eerily familiar. Of course, my example didn't have you paying any less than you do now. Guess were that leads me. I'll admit, that my first thought the other day was that you just wanted a lower bill. That wasn't fair on my part. However, you've done little to clear it up.

G Coyle said...

Iam - I'd like for the sake of discussing the sewer rate structure et al, you and NAC refrain from framing the conservation to your liking.

It is so simple - someone noted the local sewer rate structure is anti-conservationist and discriminatory for the least users.

I agree with the point - that we needed to redress the rate structure along with all the other reform it will take to create a 21st century wastewater infrastructure here.

This is not an issue of clubbiness, who your friends are, who you drink with... or as childish as it seems, who you like or dislike personally.

If we move forward with a civil society, or the hope for one anyway, how does this blog see it's role?

G Coyle said...

“I don't think that you will find many(if any)that comment here who will disagree with fairness and conservation.” Iamhoosier

Oh yeah, then why spend 70% of the energy responding attempting to damage the argument and motives of the original commenter?

Why not glean the truth out of the story and discuss the issue of rate structure only?

In spite of all your hot air, I still think reasonable people would acknowledge that a utility rate structure that encourages conservation is a win-win.

The final analysis here is - “shut up, we like it just the way it is.” Methinks you are all infected with NA Syndrome...

Randy said...

someone noted the local sewer rate structure is anti-conservationist and discriminatory for the least users.

And no one, Gina, was critical of that, neither when I brought it up first with a doable rate plan that would reward conservation, nor when Kathleen urged the same with a different plan. Kathleen's plan, however, would result in a $25/month access fee to all ratepayers and then a fee for usage that would average an additional $18 a month even under the lightest rate increase under consideration.

Still waiting for that apology.

The New Albanian said...

This is not an issue of clubbiness, who your friends are, who you drink with... or as childish as it seems, who you like or dislike personally.

It seems to me that the life of this or any other city is played on a multi-dimensional chessboard, and that the fundamental fallacy that prefaces periodic populist uprisings is a mistaken belief in that one syllogism which, if proven, renders all the rest comprehensible, with a subsequent falling of dominoes.

Accordingly, there are numerous issues with the sewer rate debate here. In my opinion, not one of them can be reduced to a size small enough to be drowned in a bathtub or expressed by 1 + 1 = 2.

One is the perfectly reasonable need for greater conservation consciousness for all resource usage.

Another is the relationship of the utility and its position with regard to the city, and the bond holders, and the EPA. There is at least some element of timeliness to this relationship, is there not?

Another is that some local elected leaders advocate what many of us regard as a shortsighted and catastrophic "solution" to the issue of sewer rates.

The topics for discussion range far and wide, and what I keep hearing is that if I don't agree with Kathleen's singular assessment to the exclusion of every single one of these other aspects, then (a) I'm flat wrong, (b) I'm too stupid to grasp math, and (c) it's all personal animus on my part, if not outright misogyny.

Actually, I've never once argued with (b), and confessed to it often.

The other two assertions are pure dreamscape.

Occam's impeccably simplest explanation here is that our sewer system and the various mechanisms it embraces are abundantly dysfunctional in a staggering number of ways.

I'm not sure that NAC has taken an official position on any of it, beyond the perfectly plausible assertion that money collected for sewage disposal should be enough to pay what it costs to run it, and money intended for other uses should not be sacrificed to social engineering and ward heeling.

I'm willing to entertain any and all proposals for the minimum usage/fairness/environmentally sound rate. While I consider these, the regulatory/bond poleaxe poised above the city's head makes me slightly nervous, and I keep looking at my watch.

A purely personal aside: As Gina continues her merry and condescending abuse of me and mine for misogyny, and clubbiness, and hormonal flatulence, and syndromism, and heaven knows what else -- and as she piously insists that it is irrelevant whom one likes or dislikes personally -- then one might imagine that she would not commit precisely (and continuously) the very same errors herself.

For those just tiuning in, it all began with (as I recall it) two words from Jeff to Gina: "Then leave."

Since then ... sighhh. Is it personal to me? Of course it is -- but only when it's the "destroy first" crowd. By all rights, the remainder of us should be rowing together. We don't, and Gina, that's the New Albany Syndrome, the tendency for non-compromise that is totally real, not a phantom male conspiracy that simply does not exist where you see it.

Jeff Gillenwater said...

Over and over again we get innuendo and personal attacks in return for dealing with the actual argument put forth on a factual level.

NA Syndrome? No doubt.

Iamhoosier said...

Gina,
I'm not trying frame anything. I've tried to take what someone has written and either ask questions about it, agree with it, or point out where I disagree. Jeff even did a much more thorough analysis. How that is "framing" is beyond me.

Now this is framing--Just exactly how would Boston handle this?

Mark

Iamhoosier said...

Framing the discussion.

Kathleen actually framed the issue either Friday or Saturday. Which is her right as she raised the issue.

"Maybe this analogy will make the inequality clear to anyone not ready to change the rate system BEFORE adding any increase."

So yes, "we" have concentrated on this issue to the exclusion of others because the initiator stated it that way. Not me. Not Roger. Not Randy. Not Jeff.

G Coyle said...

The system should bill out what it costs to run it.

All agree?

The system should have a fair, progressive, transparent rate structure?

All agree?

What else can we agree on?

I’m really not interested in being drawn into a fight. I was cured of “Battered Town Syndrome” years ago. I am interested in reforming our local government. Other than something you wrote about the system paying it’s cost, as opposed to using economic development funds, which I as well have supported publicly, what other ways can we address an antiquated dysfunctional sewer utility and bring it into the 21st century? I’ve offered replanting the hardwood canopy to reduce demand on the stormwater system which then just blows up the sewer system. All good ideas welcome, if not here, post them at my blog.