City Reviews Utility Policies: Water and Sewer Rates and Connection Fees Studied in Richmond
By Michael Martz, Richmond Times-Dispatch
Apr. 2–Rocketts Landing lies mostly in Henrico County, but the $250 million urban development gets its water and sewer service from Richmond.
The rates are higher, but the cost of connecting to the city system is a deal — $7,755 for the development’s first phase. The connection fee in Henrico would have been $2.3 million, according to Richmond utility officials.
The different approaches to paying the rising costs of public utilities is why Richmond homeowners pay more than three times as much each month for minimum water and sewer service than residents in the county.
However, that could change this year as Richmond takes a hard look at what it costs to provide water and sewer service to about 60,000 homes and businesses, and how the city utility raises the money to pay for it. The study won’t be complete in time for the pending two-year budget, which includes proposals for double-digit rate increases in the biennium, but the way Richmond charges for utility services is likely to change.
“There’ll be no giveaways here,” said Chief Financial Officer Harry E. Black, who also is acting unofficially as chief administrative officer. “This is a window of opportunity to look at all of it and make adjustments.”
Black and utility officials acknowledge the need to change a rate structure that currently discourages water conservation, but they also say any changes will have to balance the protection of consumers with the need to attract economic development to a city that cannot annex land around it.
With the city becoming a popular place to live and work, some members of the City Council say it’s the right time to relieve pressure on monopoly rate payers by increasing the cost of connection to Richmond’s utility system.
“Maybe we need to be less of a giveaway, and more competitive with the counties on these fees,” said 4th District Councilwoman Kathy C. Graziano, a member of the council’s finance committee.
A new home in Richmond pays $100 to connect to the system, plus a $30 excavation permit fee. In comparison, Henrico charges $5,035 for connecting a new single-family home and $7,375 for every town house and condominium, such as those under construction at Rocketts Landing. Chesterfield County charges $5,642 for homes and town houses, and Hanover County has a capacity fee of $11,560 for its smallest meter.
The disparities are similar for commercial and industrial customers. A business with a 2-inch water meter pays $1,500 to connect to water and sewer in Richmond — $75,750 in Henrico.
“Do we allow developers to connect at these low rates, and then spread cost across all consumers in Richmond?” asked 1st District Councilman Bruce W. Tyler.
The cost of minimum water and sewer service in Richmond has become a target of public ridicule and concern. The Green Party of Richmond recently offered a $100 award to anyone who could name a city in the United States that has a higher set of minimum fees than the $43.55 charged each month in Richmond.
“It is unjust for the city to place these exorbitant service charges on minimum water use,” said Scott Burger, the party chairman.
Neighboring counties charge utility customers every two months, but their minimum water and sewer rates on a monthly basis are more than two-thirds lower than in Richmond — $13.70 in Chesterfield, $13.65 in Henrico, and $12.07 in Hanover.
That’s before the first drink. Richmond also charges more for customers who use the least than for those who use more. Henrico, in contrast, gives a 38 percent discount for customers who use a small amount of water.
“Richmond’s rate structure does not promote conservation and is certainly not fair to those who use little water,” said Oregon Hill resident Charles Pool, who began lobbying city officials this year over the issue.
Pool is right, acknowledged Chris Beschler, director of public utilities in Richmond. “The existing rate structure does not promote conservation,” Beschler told the finance committee in a budget workshop this week.
The pending cost-of-service study will allow Richmond to address the problem, as well as the imbalance between connection fees and rates, he said later. “Everything’s on the table.”
In the meantime, the city says it needs more money to keep the system operating. Mayor L. Douglas Wilder has proposed rate increases of 6 percent a year for water and 5.5 percent a year for sewer over the next two years to pay the rising costs of improving an old utility system.
The proposed sewer increases would cover the continuing expense of preventing discharges of sewage-contaminated water into the James from the city’s centuries-old combined sewer system. The higher water rates would pay to meet federal and state regulatory requirements at the city’s water treatment plant on the James and its main reservoir at Byrd Park.
If the City Council chooses to wait for changes in the rate structure before raising rates, Beschler said in an interview, “We would not have enough money to run the utility.”
Contact staff writer Michael Martz at mmartz@timesdispatch.com or (804) 649-6964.
—–
Copyright (c) 2007, Richmond Times-Dispatch
Distributed by McClatchy-Tribune Business News.
For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.