You may have noticed a change in your water rates if you are a metered user of the City of Amsterdam water system. Water is used for drinking, sanitation, manufacturing and fire prevention. Water rates and fees pay for the hefty cost of water filtration, distribution and maintenance of the system.
Earlier this year, the City conducted a review of its billing practices related to metered water. The need for this review was required because of an apparent large disparity between flat, non-metered rates for one- and two-family households and the rates paid by metered multi-family and commercial users.
In April of 2012, the City hired an engineering firm to review usage and billing methods. The study confirmed inequity in the billing practices. As a result, changes were implemented and incorporated into the 2012-2013 City budget.
Under the old system, metered users were charged a flat rate that provided for a set amount of water use per quarter. That equated, in some cases, to three times the average use of a one-family household. What this meant was that a metered property would pay one-third of the rate that a single unit, flat-rate user would pay.
To correct this, the billing structure was changed. The City moved to a billing method similar to that used by other utilities, such as National Grid. Metered accounts are charged for each cubic foot of water used plus a set distribution fee.
These rates and fees were set so that a metered user, using the average amount that a single-family home would use, would pay the same amount as an unmetered, single-family home would pay. The advantage of the new structure is that multi-unit metered and commercial properties will pay rates that are consistent with flat-rate payers.
Typically, water usage varies by season and the quarterly bill will change according to personal usage. This method of billing will encourage water conservation, as billing is tied to usage.
The cost of a safe and reliable water system must be paid for through water rates and fees. The City is dedicated to billing for this resource in the most equitable way possible.
The City of Amsterdam has modified its water billing method for metered accounts effective July 1, 2012. The old system charged a minimum use fee based on connection type. This fee allowed for a large amount of water usage before the minimum fee was exceeded. Over the years the water rates were not adjusted while the unmetered unit charges were increased to pay operating costs. This resulted in a charge structure that was not equitable between metered and un-metered users.
In the case of residential meter users the following situation existed in 2011-12:
A one-family house without a meter was charged $360 per year for water. The average use of a one-family house is 7,053 cubic feet of water per year. Dividing 360 by 7,053 yields an effective water rate of $5.12 per 100 cubic feet. Each additional dwelling unit was charged an additional flat rate fee.
A residential structure with a meter was charged a minimum charge of $90 per quarter, equivalent to the flat charge of $360 per year. The meter was read and use was charged at the rate of $1.68 per 100 cubic feet. As a result the metered residential structure could use (360 x 100)/1.68 = 21,428 cubic feet of water before exceeding the minimum charge. This amount is three times the average usage of a one family residence.
Clearly the two classes of users are not treated consistently. A three-family residence paying flat-rates would pay 3 x 360 = $1,080 per year for water. A metered 3 family residence would on average pay $360 per year.
The 2012-13 billing structure is as follows:
A one-family house without a meter is charged $346 per year for water. The average use of a one-family house is 7,053 cubic feet of water per year. Dividing 346 by 7,053 yields an effective water rate of $4.91 per 100 cubic feet. Each additional dwelling unit continues to be charged an additional flat-rate fee.
The metered billing structure was modified. The residential metered rate was increased to $3.00 per 100 cubic feet (an amount that is more consistent with the effective rate of flat-rate payers and the rate charged by other municipalities). A fixed charge of $216 was established (a rate lower than the prior minimum charge, in part to account for operating costs that are not related to usage and for fire protection) and the bill is now computed based on the sum of the fixed charge plus any usage multiplied by the metered rate. For example, a three-family metered property would pay a fixed charge of $216.00 plus $3.00 times the amount of water used. The average use for a three family house is 17,847 cubic feet per year. This yields an average bill of 216 + (3 x 17,847/100) = $751 per year for a metered three-family residence as compared to an annual bill of $1,038.00 for an unmetered three- family.
These changes improve the overall fairness of the billing system. The City recognizes that this is a major change and the rates will need to be monitored to assure that the billing is done in a fair manner. It is difficult to assess the impact of a change of this type prior to its implementation. It is expected that users will alter their habits since bills will vary based on usage and that billing will thereby decrease.
Further, the City recognizes that further modifications to the water billing structure may be desirable. The metering of all users would, of course, provide the fairest method of billing. The limiting factors are the costs of metering as compared to the savings that would result from the reduction of use. The City plans on implementing such a study. This change was made initially because there was no capital cost associated with the changes and the changes corrected large inequities in the billing process.