Jan 15, 2015

The Pricing Dilemma

 Neda Simeonova

Located southeast of New Orleans, St. Bernard Parish's population is almost 36,000, according to a 2010 U.S. Census Bureau report. Even though it was ranked one of the fastest-growing counties in the U.S. between 2007 and 2008, its current population is only slightly more than half of what it was in 2005, prior to Hurricane Katrina-associated evacuation and out-migration. 

At the beginning of this year, the St. Bernard Parish council approved a significant rate increase—almost doubling residents’ water and sewer rates and even tripling rates for some of its commercial users, according to a NOLA.com, The Times-Picayune report.

With the increase in place, the average residence—which uses about 8,000 gal of water per month—will see a jump from about $13 to $24 per month, and the average sewer rate is expected to increase from about $15 to $36 per month. 

While this hike seems significant, the report noted that the parish has not made any rate changes since 1997. The rate increases are in an effort to qualify and pay interest on two state loans need for capital improvements: $21 million for water pipe and $10 million for sewer lines. In addition, a portion of the increases will go toward hiring 18 to 20 new employees for the water and sewer department. 

These much-needed water quality improvements come after a brain-eating amoeba found in St. Bernard’s water system in 2013 led to the death of a four-year-old boy. 

While St. Bernard’s population drop in the aftermath of Hurricane Katrina, causing fewer system users and ultimately shrinking its budget, is a unique case, the complete lack of rate adjustments over the past 18 years is quite common for other municipalities across the nation. 

Thus, it is no surprise that many utilities are gearing up for rate increases. In fact, 71% of the Water & Wastes Digest readers who participated in a recent online poll stated that their utilities plan to implement water and sewer rates increases in 2015.  

These increases are necessary to cover the ongoing costs for infrastructure improvements, such as removing wastewater and storm water runoff from the streets and meeting the standards set by the U.S. Environmental Protection Agency for water quality. 

Many of these increases only add up to less than a penny per gallon, deeming the services hardly unaffordable. Unfortunately, paying more for city water and sewer services typically is the last change local residents want to see, and in some cases, the higher rates are making life tougher for people with fixed budgets. 

With rate increases quickly becoming the norm, it is important to remember that not pricing water correctly in the first place has been at the root of many problems in the water industry. Pricing decisions never are purely financial; they also are sociopolitical, and we must ensure that those who cannot afford to pay for water are not priced out of this valuable resource.

About the author

Neda Simeonova is editorial director of Water & Wastes Digest. Simeonova can be reached at [email protected] or 847.391.1011.

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