TWW sets new water rates as unpaid bills trickle down

TWW sets new water rates as unpaid bills trickle down

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Tisbury Water Works (TWW) announced a new rate structure for water service, effective in July. The changes outlined at a public hearing Monday night are the first since 2003. They are based on a two-step conservation rate which, simply put, means that the more water people use, the more they will pay.

Billing also will change from one annual bill to semi-annual billing in July and January. Although the extra mailing is an added expense, with meter reads every six months instead of twelve, savings may result from discovering and repairing leaks sooner.

Speaking of billing, since a move by the water company to shut off customers whose accounts were delinquent, $167,000 that was overdue has shrunk to a bit less than $19,000.

Among rate increases for fiscal year 2011 (FY11), the flat rate usage charge for residential accounts changes from $333 for up to 40,000 gallons annually, to $200 for up to 20,000 gallons twice a year, an increase of $67 annually. Life Line account holders’ base rate will increase $20 annually, and veterans, $50.

Recognizing that the water delivery system is the same for residential and commercial properties, the water commissioners decided there should be one rate for both.

Adjustments to bring the commercial and residential rates closer together will be phased in over three years. For FY11, the new commercial base rate remains at $220 for up to 20,000 gallons semi-annually. The old rate was $440 for up to 40,000 gallons annually. The residential base rate, however, will increase to $210 semi-annually for up to 20,000 gallons in FY12, and $220 in FY13.

Under the new rates, the charge for excess gallons used over 20,000 semi-annually will be the same for all accounts. The excess charge for additional gallons used between 21,000 to 50,000 gallons will be $2.00 per 1,000 gallons. For more than 50,000 gallons, the excess charge will be $2.50 per 1,000 gallons used.

The water commissioners voted to accept the new rate structure at a meeting a few weeks ago, as presented by consultant Douglas Gardner pending the public hearing.

The water commissioners hired Mr. Gardner, president of Pioneer Consulting Group in Woodbury, Conn., to review the rate structure after TWW became a new town department on June 30, 2009. Mr. Gardner’s expertise is in water rate studies, sewer rate studies, and enterprise fund accounting systems.

Up until last year, TWW had operated as an independent entity established by charter in 1905. Voters at a special town meeting in April 2009 approved amending TWW’s charter to make it a town department, operating as an enterprise fund under Massachusetts state law starting July 1.

Consultant’s advice

In Mr. Gardner’s public hearing presentation at the Tisbury Senior Center, he said he began his analysis with a cost of service study to look at how TWW’s money is spent. As a next step he determined the costs that should be passed on to the actual users. As a point of reference, Mr. Gardner said an average household of four uses about 90,000 gallons of water a year.

In his PowerPoint presentation, Mr. Gardner noted TWW has not changed its rates in 7 years. Now, however, expenses are starting to exceed revenues. Water consumption also decreased, particularly last year because of a cool, wet summer. But since TWW operates as an enterprise fund, revenues and expenses should break even, Mr. Gardner said.

The water department also must fund its capital improvements, for which $140,000 is needed in 2011. At town meeting in April, voters approved TWW’s request to spend some of its surplus funds to hire an engineer to work on a master plan. The plan’s purpose will be to identify inefficiencies in the water delivery system and pinpoint where upgrades may be needed, Mr. Gardner said.

Among his recommendations, Mr. Gardner advised the water commissioners to charge interest on past due bills and to come up with a termination policy for non-payment in accordance with Massachusetts General Laws. Mr. Gardner said he noticed some accounts had been delinquent for three to four years.

As he pointed out, if debt from delinquent accounts is not reduced, then the rest of the ratepayers bear the burden if rates must be increased to offset it.Since payment plans have been unsuccessful in the past, Mr. Gardner recommended their elimination.

Delinquent accounts trickle down

Based on Mr. Gardner’s suggestions, the water commissioners recently stepped up their collection efforts.

Reminder letters about overdue bills were sent on March 19 and twice since then. At the time the first late reminder went out, TWW had more than $167,000 in outstanding bills.

On May 13 water department personnel began posting blue shut-off notices at delinquent account owners’ properties. TWW also advertised the impending water shut-offs in Island newspapers.

Last Thursday’s issue of The Times included an article “TWW will begin shutting off water Monday for unpaid bills.” The list of delinquent TWW account holders was available online at mvtimes.com.

In an update from Ms. Diamond yesterday, she said TWW collected $48,830 from May 10 through May 18. Twenty-two accounts were terminated Monday for non-payment. By the end of the day Tuesday, TWW had received payments that brought the outstanding accounts balance down to $18,677.

Monday’s public hearing was attended by TWW water commissioners David Schwab, Elmer Silva and Roland Miller, TWW interim superintendent Timothy Sylvia, and Ms. Diamond. Tisbury finance and advisory committee chairman Larry Gomez and a Times reporter were the only members of the public present.