Thanks to the promise of new federal and state revenue, Sewerage & Water Board officials have pared back a series of steep rate increases they first proposed last fall.
New Orleans water board trims back giant proposed rate increases
Published: Tuesday, May 08, 2012
Michelle Krupa, The Times-Picayune By Michelle Krupa, The Times-Picayune
Thanks to the promise of new federal and state revenue, Sewerage & Water Board officials have pared back a series of steep rate increases they first proposed last fall. Instead of nearly doubling them, the new plan -- which has yet to be approved -- would boost homeowners' water rates by 80 percent to 82 percent during the next four years. The additional money would finance day-to-day operations, rebuild cash reserves, and pay for critical construction projects, including the city's share of more than $2 billion in federal drainage work.
A new drainage fee also would be less than originally proposed, though the change would amount to about a dollar less per month for residential and commercial lots. Industrial lots would be assessed a fee about $4 a month less than originally envisioned. The fee, which doesn't exist now, would be based on lot size and would be levied starting next year.
Under the new plan, the combined water and sewer bill for a typical homeowner would jump from about $52.50 a month this year to $94.92 a month in 2016 -- $8.77 less than initially proposed. Midsize businesses would see their rates rise from an average $2,956 a month today to $5,334 a month in 2016 -- nearly $500 less than first presented.
The original plan had called for increasing water and sewer rates by 15 percent annually for the next five years; the revised one would increase water rates by 12 percent a year and sewer rates by 13 percent a year over that same period.
The drainage fee would top out at $22.74 for homeowners and $26.89 for businesses in 2020.
The estimates do not include garbage fees collected on monthly water bills and remitted to the city's Sanitation Department.
The water board plans to vote on the rate proposals in June, triggering votes by the City Council and the city's Board of Liquidation. Meanwhile, the agency plan to conduct a citywide study of drainage service before seeking approval of the drainage fee from the water board, the council and voters citywide.
By far the largest influx of new money helping to drive down the proposed rate increases is an initial federal commitment of $141 million to update and fortify the agency's electrical plant, which has broken down four times since Hurricane Katrina.
Madeline Goddard, the S&WB's deputy general superintendent, said the improvements include relocating a Mississippi River water intake station, now housed in an antiquated facility at Oak Street; upgrading turbines and boilers used to generate electricity; hurricane-proofing the power plant building and an emergency fuel storage tank; and fortifying the underground power distribution network.
"Large boiler rupture sparked New Orleans water trouble," Michelle Krupa, Nov. 25, 2010
Consultant's study that led to rate proposal, September 2011
"New Orleans eyes new FEMA money to fix water agency power plant," David Hammer, Nov. 15, 2011
New rates as published by the New Orleans Sewerage & Water Board, May 1, 2012
PowerPoint explanation of power plant retrofit plans, May 2, 2012
New Orleans Sewerage & Water Board resolution approving deal with city to accept money for power plant retrofit, May 16, 2012
The mayor, state and federal officials still must approve the renovation plans, Goddard said, adding that design and construction likely will take three years.
The money is part of $247 million that FEMA awarded to New Orleans in November to prepare for future disasters. Ryan Berni, a spokesman for Mayor Mitch Landrieu, said the mayor made improving the power plant a top priority after a mechanical crash in November 2010 led to a 41-hour boil-water advisory across the east bank.
Also helping soften the proposed rate increases is a $9 million loan from the state Department of Environmental Quality, as well as the early repayment of nearly $22 million that the city fronted for emergency utility repairs and the legal claims settlements, officials said.
In addition to financing daily operations and construction projects, the rate increases would help the agency rebuild a cash reserve equal to 200 days of routine expenses, a key threshold that would improve the agency's bond rating and its borrowing ability. The water board also wants to hire more skilled workers for all aspects of the operation, to install automated water meters, and to perform more inspections and maintenance of fire hydrants.
Meanwhile, S&WB officials are working to respond to complaints voiced at public meetings on the rate and fee proposals.
Top among the concerns was the impact of steep increases on elderly and disabled residents. Officials said they are considering expanding the customer-financed "water help" program for bill payment and plumbing repairs, reducing late-payment fees and conducting a pilot program that would restrict the water flow to delinquent customers rather than shutting off water altogether.
Residents also said they want infrastructure improvements to be made "equitably" across the city. Agency officials said they would distribute maps of construction work and document the use of FEMA dollars. They also plan to cut in half the amount of water they provide to public and nonprofit users within five years.
Michelle Krupa can be reached at firstname.lastname@example.org or 504.826.3312.
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