Survey Examines California Wastewater Rates

Wastewater utilities across the country are struggling with the need to increase rates to pay for the full cost of service.

Jun 1st, 2004

by James Laughlin

Wastewater utilities across the country are struggling with the need to increase rates to pay for the full cost of service. The cost of maintaining an aging infrastructure — and the limited chance for additional federal funding — are driving a trend toward higher wastewater fees.

California may not be the most representative of states, but a recent jump in wastewater charges there may be indicative of changes to come across the country.

California wastewater utilities increased their rates an average of 8.8 percent from 2002 to 2004, according to a recent survey conducted by Black & Veatch's Enterprise Consulting Group (ESG).

The consulting and engineering firm has been tracking wastewater rates in California for a number of years. Since 1992, wastewater charge increases have been quite modest, representing an average increase of 3.3 percent per year. In the most recent survey, researchers found that average rates increased from $19.73 in 2002 to $21.48 in 2004.

The survey includes 524 cities and districts encompassing all 58 counties in California. The charges developed in the survey represent a typical single family residence's monthly wastewater service charge. The charge includes collection charges, treatment charges, customer billing charge, and any other surcharges related to providing wastewater services.

To develop a uniform comparison of typical monthly residential wastewater bills, survey findings are based on 12 hundred cubic feet (9,000 gallons) per month for those rate structures based on volume. The survey does not present rates or charges for commercial, industrial, or other types of customers.

While the average rate increase was only 8.8 percent, ESG found that 68 percent of the survey participants increased rates by an average of 21 percent. Twenty-eight percent of the survey participants had no rate change and five percent actually lowered rates by an average of 10 percent.

The survey includes rate structure information for each city and service area. Flat rates for residential users continue to be the predominant rate structure in California, with 88 percent of surveyed agencies using that structure. Ten percent of the utilities surveyed used a volume based structure and only 2 percent used some other rate form.

Flat rate structures include those based on a flat rate for residential customers, and rates based on number of bedrooms, bathrooms, fixture units, or lot square footage.

The survey found that cities and districts using a volume based structure averaged about $31.05 while those with a flat rate structure averaged about $20.38 for the monthly residential wastewater charge.

Despite California's relatively arid climate and concerns about water conservation, there hasn't been a shift toward volume based rates, the predominant rate form in the rest of the United States.

It will be interesting to see if the speed and size of rate increases continues to grow in California, and the rest of the country. According to an analysis by EPA, utilities need to raise their rates 3 percent a year, every year, to meet the expected rising cost of maintaining aging infrastructure. That would be politically challenging, to say the least.

The Black & Veatch "California Wastewater Charge Survey 2004" is available free of charge to cities and districts. To request copies of the survey, contact Ms. Jamie Hall at hallja@bv.com or 949-788-4229.

James Laughlin, Editor

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