No good conservation goes unpunished

[Ogie Oglethorpe]

Yet another reason I am so glad I am not a resident of Fulton county

Fulton to increase water rates 15 percent

Conservation reduces county use by 30%

By D.L. BENNETT
The Atlanta Journal-Constitution

Published on: 05/08/08

Fulton County officials praised county water users Wednesday for their success at conservation — then socked them with a 15 percent rate increase for their effort.

The conservation penalty the County Commission adopted Wednesday 6-0 matches the increase Atlanta utility officials asked to impose earlier this year but which the City Council so far has resisted. The average water/sewer bill should increase nearly $9 per month to a total of about $68 per month, water officials said.

The county provides water and sewer service to some areas of north Fulton County. It provides sewer service only in Sandy Springs and south Fulton. The county also has some north Fulton customers who only get water.

All will get the 15 percent hike.

Utility managers said water use has dropped by as much as 30 percent since last year when Gov. Sonny Perdue asked each county to cut usage by at least 10 percent because of the lingering drought. That has Fulton facing potential default on its bonds, said Angela Parker, public works director.

"We just can't swallow this reduction in revenues," Parker said.

She said Fulton one day might roll back the rates if the drought ends and revenues return to pre-drought levels.

Commissioners said they felt Fulton had to raise rates despite the slumping economy.

"I'm deeply concerned about raising water rates, but we have no choice," Commissioner Emma Darnell said. "This is a minor range of situations where a rate increase can be justified."

Economy Jackson of Atlanta protested the action on behalf of Habitat for Humanity, which builds low-cost homes all over Fulton.

"Because people are saving money, they are being charged," she said. "We are doing what you asked us to do. We are opposed to this rate increase."

Atlanta's proposed conservation penalty continues to be stalled in the City Council's utilities committee and does not appear to be headed toward passage.

Atlanta water utility officials began pushing on Tuesday a four-year rate hike plan that includes the money the conservation penalty would have collected. It would bump up the average water/sewer bill 80 percent — from $84.60 a month to $151.92 — during the next four years.

Council members are expected to consider the rate increases in the next seven weeks as they consider the 2008-09 budget, which starts July 1 and has a projected $140 million shortfall.

[Wezil]

A utility company did the same thing here. Urged conservation then raised rates b/c they didn't generate enough income.

It's not quite as bad as the utility company that was sued and fined for adding an illegal surcharge to consumers monthly bills. They turned around and added an additional surcharge to cover the fine.

[Darius871]

How was the second one not illegal?

[Wezil]

Good question. Wish I had an answer for you.

[Spiffor]

[Wezil]

Darius -

Enbridge is set to charge its Ontario customers a new fee to help pay the costs of an out-of-court settlement. In 2004, the Supreme Court ruled against the natural gas company -- for charging unfair fees.

The Supreme Court found that the company had billed illegal late-payment penalties from 1994 to 2002. The fees had been approved by the Ontario Energy Board (OEB).

The company agreed to pay $22 million in a settlement, but the OEB said Enbridge now has the right to reclaim that money, even if it's from the same customers it overcharged.

Gord Garland, who launched the lawsuit against Enbridge over the late fees, said the company is again mistreating its customers.

"It's outrageous that a company engaged in and essentially convicted of a criminal act would then ask its customers to pay for that act," he told CTV News.

In the Supreme Court ruling, Justice Frank Iacobucci wrote that "the late-payment penalties were collected in contravention of the Criminal Code," which trumps any OED ruling.

The OEB has also approved the new fee. In response to questions from CTV News, the OEB issued a statement explaining its decision. It noted that:

Costs had been incurred prudently;
Enbridge was acting in accordance with provincial government guidelines;
The late payment penalties Enbridge was charging were approved by the Board at that time; and,
the Ontario Superior Court had ruled in favour of Enbridge on two prior occasions, before being overruled by the Supreme Court of Canada.
Lawyers said that because Enbridge is a utility, it's guaranteed 'cost recovery.'

"What the OEB does is determine what the costs were and allow the utility to recover them from the customers," said regulatory expert George Vegh.

The new fee may be only a few dollars, but Garland said customers will be furious.

"That is money being taken out of Enbridge's customers' pockets and being put into Enbridge's pockets," he said.

http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20080216/enbridge_gas_080216/20080216?hub=TopStories

And there is your answer, such as it is.

[Darius871]

Evil genius

They probably had this in mind as early as the settlement negotiations, good stuff

[Kuciwalker]

Originally posted by Wezil
A utility company did the same thing here. Urged conservation then raised rates b/c they didn't generate enough income.

It's entirely sensible. Less supply (because of a drought) should increase rates.

[Wezil]

I'm not an economist but.... isn't this a case of less demand increasing rates?

[snoopy369]

No, you're not an economist are you

In fact, it is neither.

It is reduced sales that is causing the increase in rates.

Kuci is theoretically correct, but not in this instance (price increases in a market economy with decreased supply or increased demand; but this is not a market economy, it is a government monopoly, and they are explicitly reacting to a decrease in sales, not the decrease in supply, although the one is somewhat causing the other.)

[Wezil]

Originally posted by snoopy369
No, you're not an economist are you

Nope.

I took Econ 101 some 20 years ago. The final was a 2 hour multiple choice test.


The issue is frustrating for those that do conserve as they see no tangible benfit for it. Of course they would have paid considerably more if they didn't conserve but this is often lost inthe discussion...

[snoopy369]

Well, those who conserve are paying less than those who don't

Ultimately of course this is the problem with government controlled utilities (which water certainly should be, don't get me wrong). A business would simply downsize when faced with decreased revenue; a government utility simply charges more, because you don't have a choice

In the optimal world you would have the citizens vote on whether to reject the hike (say, require a public vote on any hike beyond inflation rate, or a reasonable facsimile of that, say 5%) and then force the board to cut costs rather than increase rates. I can't imagine they need THAT large of a bureaucracy to provide water services...

[Wezil]

Plus there is infrastructure and what not to pay for. I saw an article recently about high volume power users actually being paid to consume during a low demand period.

I'll look for it.

[Ogie Oglethorpe]

Originally posted by snoopy369
No, you're not an economist are you

In fact, it is neither.

It is reduced sales that is causing the increase in rates.

Kuci is theoretically correct, but not in this instance (price increases in a market economy with decreased supply or increased demand; but this is not a market economy, it is a government monopoly, and they are explicitly reacting to a decrease in sales, not the decrease in supply, although the one is somewhat causing the other.)

To make matters worse, much of the supply woes were due in large part to the bungling of the Army Corp of Engineers allowing the Lake Lanier reservoir to be inadvertantly depleted by not having appropriate failsafes (redundant level gages). In a mere few hours they accidently released 22 billion gallons just as the drought was begining to be felt. Thus making the supply issue of emergency proportions as opposed to a mere concern. Granted the former is a federal govenmental entity and not a local government.

[Ogie Oglethorpe]

Originally posted by snoopy369
Well, those who conserve are paying less than those who don't

Ultimately of course this is the problem with government controlled utilities (which water certainly should be, don't get me wrong). A business would simply downsize when faced with decreased revenue; a government utility simply charges more, because you don't have a choice

In the optimal world you would have the citizens vote on whether to reject the hike (say, require a public vote on any hike beyond inflation rate, or a reasonable facsimile of that, say 5%) and then force the board to cut costs rather than increase rates. I can't imagine they need THAT large of a bureaucracy to provide water services...

Atlanta is in serious trouble wrt budgeting. To be fair the rate hike is largely a result of poor overall city budgeting. A lot of heads are being cut in addition to tax and rate increases, OTOH it seems as if serious stewardship is in short supply as this seems to have been a long term issue that is finally coming home to roost.