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Tigard City Council Considers New Water Rate Structure
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Tigard City Council Considers New Water Rate Structure
Tigard City Council met on September 21, 2010 to discuss changing the rate structure for drinking water in the Tigard Water Service Area. Tigard's drinking water system serves a population of 57,000 in the cities of Tigard, Durham, King City and the Tigard Water District.
The City Council is considering the water rate design changes to provide a more stable revenue base, improve equity among various classes of ratepayers and encourage water conservation. City staff has been working with financial consultants on a comprehensive study of Tigard's water system revenue needs. Study findings were presented at Tuesday's meeting.
Recommended rate structure changes include increasing fixed charges, which are currently too low to cover ongoing costs such as debt service, labor, etc. Increasing fixed charges paid by every customer will assure adequate revenues, despite fluctuations in water use.
Along with increasing the fix charges overall, the fixed fee will be proportionate to meter size. Customers with large meters - those who use a lot more water than residential customers - will pay a higher fixed charge. "Currently, customers with large meters pay the same $6.86 bi-monthly fee as single family residents. That means a meter that provides water to 100 apartments, or supplies a commercial customer with thousands of gallons of water per day, pays the same $6.86 fixed charge as a single family home. That system is just not fair," explains Tigard's Public Works Director, Dennis Koellermeier.
Another key recommendation is to introduce tiered water rates to promote conservation. Under the current rate structure, variable rates differ by type of customer, but not by the quantity of water used. There is no price incentive to consume less water, as customers using large volumes of water pay the same variable charge as those using less. With a tiered system, customers would pay more for the water they consume beyond certain threshold amounts, to encourages water conservation and improve equity. "Big water users put more of a strain on the system than smaller users, so tiered water rates offer another method to make the water rates fairer," notes Koellermeier. Several City Council members expressed support for water conservation measures. Councilor Nick Wilson promised to introduce conservation as a discussion topic at the City Council's next goal setting session.
Staff also propose to increase Tigard's systems development charges (SDCs), a one-time fee paid by new development. SDC increases would be phased-in over several years. Staff recommendations will be considered for adoption by the Tigard City Council on November 9, 2010. The updated SDCs methodology is scheduled to be considered by the City Council on December 14.
At the September 21 Council meeting, the City Council also received an update on the need to increase water rates. New bond financing requirements mean water rates must increase now, or the Lake Oswego Tigard Water Partnership project will be delayed. "If we delay that means Tigard's contract with Portland, set to expire in 2016, would need to be renewed. That cost would come at a premium", says Koellermeier. Partnering with Lake Oswego is still the least expensive option available for Tigard's long term water supply.
Tigard Water Service Area's current water rate for a typical residential household is $28 per month. That will increase to $30 per month on October 1, consistent with a four-year financial plan approved by City Council in 2007. Another water rate hike of up to 30 percent is proposed to take effect in January 2011. The expected water rate for a typical residential household after the January increase would be $38 per month. Koellermeier says, "This is about $10 more per month than the current typical bill today." Councilor Gretchen Buehner pointed out that Tigard's water utility will draw from its financial reserves to help hold down rate hikes.
To help customers with the rate changes, the city is moving to introduce monthly billing. This is easier on family budgets and provides a more timely account of water consumption, allowing customers to adjust water use to avoid high water bills.
Another new program will assist low-income families and others facing economic crises with their water bills. It will be coordinated through a non-profit organization that provides similar services for the City of Beaverton and Tualatin Valley Water District. More information on this assistance program will be presented to City Council on October 19.
For more information, contact Dennis Koellermeier, Tigard Public Works Director or visit the Lake Oswego Tigard Water Partnership website.
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