FAQs about Residential Water and Wastewater User Rate Changes Clean water - turn on the faucet and out it comes. Unfortunately, it’s not that easy. It takes money to pump raw water from deep underground wells, to treat it and to distribute it to our customers. It costs money to build, operate and maintain the infrastructure needed to deliver clean, safe drinking water to our customers and collect and treat wastewater in an environmentally sensitive manner. Many of these costs are not controllable by management. Despite the very best efforts of an award winning management team recognized nationally for efficiency, operation costs continue to increase yearly. Public Enterprise System The County’s water and wastewater utility operates as a public enterprise system within county government. This means it is solely supported by the rate payers who benefit from the system through user fees and charges. These fees and charges are based on the cost to operate and maintain the system. Utility Operations receives no tax dollars from property taxes, income taxes or any other tax to operate. Therefore, the utility must be self-supporting. Rising Costs Eventually, despite the best management efforts, as operating costs continue to rise, a change in rates must be addressed so costs do not begin to overtake revenues. There are many factors which contribute to the necessity for a rate increase. Some are related to uncontrollable costs which the utility must pay to provide safe and reliable service. Others are operating and maintenance expenses associated with the aging infrastructure and others are related to the rate of expansion of the utility system. Examples include: - Increasing power costs due to deregulation
- Increasing cost of purchasing service from other jurisdictions
- Increasing cost of biosolid, sludge disposal, a by-product of wastewater treatment
- Unfunded mandates:
- Security programs
- Enhanced nutrient removal (wastewater treatment)
- Sanitary sewer overflow regulations
- Increased demand for service
- Demand for preventative maintenance on existing infrastructure
Each of these factors are, in their own way, important to the efficient and effective operation of the utility and/or safeguarding the future of the Chesapeake Bay. Strategy for Cost Control Recognizing the need to be competitive and keep costs down, in 1997 the Utility created a joint labor and management program to help the agency become more efficient and cost effective by reorganizing and changing work practices. The program, Excellence in Cost Effective Leadership (EXCEL) has helped the Bureau reduce costs while maintaining environmentally sound water and wastewater practices. (For more information on the EXCEL program see the article in the Spring 2003 Customer Update). Some of the resulting strategies for cost control include: - Use of “flexible workers” – a strategy based on cross training of various “skill sets” to enhance employee skill level and flexibility
- Moving to a flatter, team oriented organization with fewer layers of management and more flexible workers
- Cut in work force by 12% since 1999, resulting in $8.7 million savings
- Using technology as a strategy to cut costs, our remote monitoring and control systems have allowed us to move away from 24 hour a day staffing of our facilities to single shift operations.
- Electronic mapping of buried infrastructure accessible to our field maintenance crews with use of laptop computers increases the efficiency and accuracy of their work
- Outsourcing non-core activities. Routine tasks such as lawn care and painting are outsourced rather than performed by highly trained utility workers.
Why is this rate increase necessary?Without a rate increase, the Utility’s expenses will exceed its revenues. As stated earlier, the Utility’s only source of revenue for operating expenses are user fees and charges. Therefore, rates must be increased to cover expenses. Anne Arundel County Code requires that the revenue budget for the Utility Enterprise Fund be sufficient to cover the expenses. How were the new rates developed? The County worked with a nationally recognized water utility finance expert as a consultant to develop a rate model which took into consideration all the factors that affect the finances of the Utility. The model incorporates the highest standards of the American Water Works Association (AWWA). Information used to develop the model included: Utilities Operating and Capital Budgets Debt Service on Outstanding Bonds Comprehensive Annual Financial Report Historic Data on: consumption, operating costs, Capital Improvement Projects, revenues
Using this information, a comprehensive, long range model was established to project financial needs for the next 20 years and recommendations were developed for rate changes to address these needs. How will this increase affect the average customer? Below are charts indicating the current rates and proposed new rates and how the changes will affect residential customer. | 
