WSSC Management Recommends Three Rate Structure Alternatives Following Open and Transparent Public Process

WSSC Ordered to Develop New Rate Structure by Maryland Public Service Commission

| News Release

OFFICE OF COMMUNICATIONS AND COMMUNITY RELATIONS

FOR IMMEDIATE RELEASE

LAUREL, Md. – November 8, 2017: WSSC management today recommended three rate structure alternatives for consideration by WSSC Commissioners at their fifth special rate structure meeting held in Laurel. The recommendation follows a transparent and collaborative public process involving nationally-renowned rate structure experts, an authority on Maryland water conservation, a consumer advocate and affordability expert, and extensive customer outreach.

“WSSC held 20 public meetings and/or hearings throughout this open and transparent rate-setting process and today’s recommendation reflects the feedback we received from our customers,” said WSSC General Manager and CEO Carla A. Reid. “The three rate structures we are recommending today minimize bill impacts to our customers, while providing us a more predictable revenue stream to pay for infrastructure improvements.”

The three recommended rate structures were part of five alternatives under consideration by WSSC and presented to customers at three October public hearings held in both counties. These five included two 3-tier and two 4-tier rate structures and a uniform, or flat, rate (see chart below). The basis for these five proposed rate structures included the following information: customer input, Commissioners’ policy priorities, Cost of Service Study, Maryland Public Service Commission’s (PSC) order to develop a reasonable rate structure, WSSC customer information, and research into the impact of various rate structures on water conservation, customer affordability, revenue stability and rate stability.

The three recommended rate structures are:

  • 3-tier inclining rate structure alternatives 3A and 3B
  • 4-tier inclining rate structure alternative 4A

Bill Impact

Under WSSC’s current rate structure, the typical three-person household using 55 gallons of water per person per day (average WSSC customers per person consumption) receives a combined water/sewer quarterly bill of $205.45. The same quarterly bill would increase to $210.06 under option 3A, while decreasing under options 3B and 4A to $184.15 and $200.62, respectively.

Outreach

WSSC engaged in an extensive public outreach campaign to garner input and feedback from residential and non-residential customers, elected officials and other interested stakeholders in both counties. In total, WSSC held or participated in 20 public meetings/hearings since spring 2017, which were attended by more than 1,200 customers and generated more than 300 total comments on the proposed rate structures. The majority of public comments focused on affordability and conservation. Additionally, all WSSC meetings were livestreamed and seen by nearly 2,500 viewers.


Affordability

Throughout the rate structure development process, affordability was an important policy consideration raised by customers and WSSC Commissioners, especially for low- and fixed-income customers. Because affordability is most effectively addressed through customer assistance programs and not a rate structure, WSSC will work with a nationally recognized affordability expert, Mr. Scott Rubin, to carefully design customer assistance programs as part of the implementation of the new rate structure. The three recommended rate structures also minimize water/sewer bill impacts for customers, with two of the options lowering the quarterly bill for the typical three-person household using 55 gallons of water per person per day.

Conservation

All three recommended rate structures are inclining tiers, which send a more conservation-oriented price signal to WSSC customers. Additionally, unlike WSSC’s current 16-tier rate structure that bills at the highest rate back to the first drop of water, the three recommended alternatives bill customers only for the water used within each tier – a commonly used practice within the industry.

“Water conservation is a priority for WSSC and an important policy consideration raised by Commissioners and customers during our extensive outreach efforts,” said Reid. “As a bi-county agency, we are very mindful of state law requiring public water systems to improve conservation efforts, and the three recommended rate structures will help us comply with this law.”

WSSC Customer Information

The development of the inclining tier rate structures was influenced by water consumption trends for WSSC’s customer base, which is overwhelmingly residential. In fact, 93 percent of WSSC customers are residential. The typical household size in WSSC’s service area is three people -- 75 percent of all households are 3 or fewer people.

Why Change?

WSSC’s current rate structure was adopted 25 years ago and good management practice dictates periodic review of rate structure alternatives. Additionally, the Maryland PSC recently ordered WSSC to develop a new rate structure. WSSC’s current rate structure was deemed unreasonable by the PSC because they found it to be preferential to low-usage customers.

Timeline

WSSC Commissioners are expected to make their rate structure recommendation on Wednesday, November 15, 2017, to both counties for their review. The Commission plans to select a new rate structure in June 2018. While not recommended by management, if the Commission selects the uniform rate, it could be implemented in July 2018. The implementation of the proposed new 3-tier and 4-tier rate structures, which will change how WSSC bills customers, must wait for a new billing system, expected to be ready in July 2019.

For more information on the five proposed rate structures under consideration and to view video recordings from past meetings, visit: www.wsscwater.com/ratestudy

For 100 years, WSSC has proudly served the citizens of Prince George’s and Montgomery counties – providing drinking water that has always met strict Safe Drinking Water Act standards and protecting the environment through vital water resource recovery services. Our vision is to be THE world-class water utility, where excellent products and services are always on tap.

 

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