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.