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Authority sets new water rate structure

By Joel Hall

jhall@news-daily.com

Conservative Clayton County water users will soon have a reason to celebrate, while more liberal users will see an increase in their October bill.

The Clayton County Water Authority Board of Directors voted unanimously Thursday, to change it's minimum-usage fees for residential and commercial water users, and adopt base usage rates for all of its 75,000 active water accounts.

The rate change that will go into effect Sept. 1 is expected to generate an additional $2 million in revenues, and shift more of the burden of water costs onto customers using the most water.

The water authority's general manager, Mike Thomas, said that residential users of 2,000 gallons of water a month, or less -- about 30 percent of the water authority's customers -- will see a decrease in their water bills.

Thomas said customers using 1,000 gallons a month will see a $4.69 decrease in their monthly bill, and those using 2,000 gallons a month will see a 54-cent decrease. However, those using 3,000 to 7,000 gallons a month will see a $3.61 increase, and those using more than that will see their bill rise by as much as $4.30 per month.

Currently, customers using 3,000 gallons a month, or less, pay $26.34 per month, regardless of how much water they use.

"[Until now,] we've never had rates that encourage conservation," Thomas said. "One of our biggest complaints at the water authority is, 'If I am using less water, then why am I paying more?' We usually hear from our fixed-income folks and seniors, because usually, they use very little water. People were really subsidizing the other people above them [in water usage]. [Now,] the higher cost will go to the people who are using more."

In September, the water authority will throw out it's simpler tier system of payment and adopt a more complicated, sliding fee scale.

Essentially, residential users will pay a base fee of $8.50 for water and $9 for sewer, whether or not they use any water at all. The rates will then go up, depending on the thousands of gallons of water they use.

According to Thomas, 43 percent of the authority's residential customers fall into the category that will see a $3.61 increase in their monthly bill, and 27 percent will pay even higher rates.

"We feel that this new structure will really be more equitable," he said.

Thomas said that water rates for commercial customers will depend on the company's meter size, in inches. However, the base usage rate for a commercial customer using 20,000 gallons a month will jump from $50 a month to $100 a month when the company uses 45,000 gallons a month, and to $150 a month when it uses 89,000 gallons or more.

Companies that use less water will see significant cost savings, Thomas said.

Part of the motivation for the changes, he said, is to help fund a $10 million capital project to replace miles of two-inch diameter, galvanized metal pipes throughout the county, with eight-inch-diameter ductile iron pipe. He said the galvanized metal pipes, installed in the 1950s and 1960s, and present in many of Clayton County's older neighborhoods, attract iron and magnesium deposits, causing decreased flows and water discoloration.

He said the ductile iron pipes will resist mineral deposits, as well as corrosion, a problem with many of the county's older metal pipes. Another motivation, Thomas said, is to increase the water authority's debt coverage ratio. For the last two years, he said, the water authority has fallen short of a 1.5 percent debt coverage ratio -- meaning the company's revenue has been less than 1.5 percent of the company's operating budget.

Thomas said the water authority needs to maintain a 1.5 percent debt coverage ratio in order to issue new debt for capital projects, and that the company must stay above a 1.2 percent debt coverage ratio in order to avoid it's current bonds going into default.

According to Thomas, the authority has approximately $210 million in bond debt, which it expects to pay off in 13 years. In the previous fiscal year, the debt coverage ratio was 1.4 percent, compared to 1.44 percent in fiscal 2009.

"That's the money we use to build new plants, build new pipe," Thomas said. "We've been going two years without meeting that 1.5 percent, so we realized we needed to increase revenue, and cut costs."

Thomas said the increased revenue from the rate-structure change, will be coupled with cost-cutting measures to meet the 1.5 percent debt coverage ratio goal. He said that within the last year, the company has frozen salaries, eliminated several positions after employees retire, outsourced many of it's construction projects, cut back on chemical usage at its plants, switched insurance providers, and reduced the number of take-home vehicles from 35, to nine.