Abrahams Group Presents Options for New Wayland Water Rates

Last week Wayland’s Board of Public Works held a public hearing to discuss the water rate report and options for new rates as compiled by The Abrahams Group.

Concerned citizens filled the Large Hearing Room at the Wayland Town Building to hear the report and express opinions of their own.

The forum and discussions stem from a capital surcharge – originally set at $236 per meter – that was adopted by the Wayland Water Department in early 2009 as a means to pay the $10 million debt service incurred through the construction of a water treatment plant.

The Abraham’s Group report lists the capital surcharge as accounting for 32 percent of the Water Department’s total revenues.

The surcharge became necessary for a variety of reasons including conservation efforts by residents as well as mandated conservation efforts from the state of Massachusetts that have led to reduced income for the Water Department. Additionally, as standard water rates go up, residents typically adjust their consumption to compensate, leaving the Water Department in a financial hole.

“Every time we increase rates, consumption goes down,” said former Water Commissioner Joel Goodmonson during the forum. “Over time, our highest users have left the system. Fifty-four percent of the revenue for the [water] department was raised by 5 percent of the users.”

Goodmonson explained that revenue remained virtually flat even with standard usage rate increases. The department, however, needed to add $1 million to its revenue stream beginning in 2009 in order to pay for the water treatment plant.

“It was not going to work to get a 2 or 3 percent raise in our revenue,” Goodmonson said, adding that the capital surcharge was designed to cover all debt.

Mark Abrahams of the The Abrahams Group explained that his company had been brought in to look at the current structure and also to help plan for the future. He briefly outlined the water report before jumping into the options his group deemed viable going forward.

Currently, Wayland’s water rate structure is designed to reward conservation – lower consumption falls under a lower pricing tier. However, Wayland also operates with a minimum usage fee, which Abrahams said, “is not a conservation-based approach.”

“The low-end user is being hit with that minimum and the capital assessment and it is really burdening the low-end user,” he said.

Of the four options Abrahams presented, the first is simply to keep the system unchanged. He said that is included as an option only to set the baseline, not as a recommendation from his group.

Options two, three and four are identical in all but one element. All three options call for eliminating the minimum fee and beginning flow-based costs with the first unit used; instituting a $112 per account service fee to cover administrative, billing and metering costs; consolidating the current five tiers into four; billing large, multi-users based on the average usage; and counting individual users in a multi-user account as individual users for the purposes of figuring the capital assessment fee.

Where these three options differ is in making up the difference in revenue vs. need.

Option 2 calls for the capital assessment fee to be based on recovering the debt service for the water treatment plant. Under this option, each account would see a $179 capital assessment fee (down from the current $236 fee), and usage rates for Tier 1 (where most residential customers fall) would be reduced by about $2 per 100 cubic feet used. Rates in Tiers 2, 3 and 4 would increase.

Option 3, on the other hand, does away with the capital assessment fee altogether but calls for increasing rates across all four tiers.

Option 4 is similar to option 2, but calls for the capital assessment fee to be based on recovering the debt service at 60 percent instead of in entirety, as in option 2. In the case of option 4, each account would see the $112 service fee (as in the other options) and would also see a $107.40 capital assessment fee. Usage fees would again be reduced for Tier 1 customers – this time by about $1 per 100 cubic feet – and would again increase for Tier 2, 3 and 4 customers.

The Board of Public Works will hold a second public hearing to discuss the water report and presented options on March 8 at 7:30 p.m.

• The Abrahams Group’s water rate study (PDF)
• The Abrahams Group’s water rates four options (PDF)