Municipal leaders from three counties of southeast Michigan agreed to allow Detroit to lease its water system to the newly formed GLWA – Great Lakes Water Authority.
For years the surrounding counties – Wayne, Oakland, and Macomb – have been buying their water from the city. They’ve long complained they didn’t get enough say over their rates or big decisions about the system.
This deal will, at least in theory, give suburbanites more direct power over the system, and (they hope) lower rates in the long run.
In exchange, the authority will pay Detroit $50 million a year in lease payments.
And it will set up a $4.5 million regional water assistance fund for low-income customers behind on their bills.[ref]Detroit, suburbs reach water deal, Michigan Public Radio, June 12, 2015[/ref]
GLWA Executive Search
Whether the GLWA executive search will find someone that will hold bigger dialogues than have been held and sees the shortcomings of how things have been handled is a bit of a mystery, one which those at risk are fearing will never be resolved.
Water AFFORDABILITY Plan
There are advantages to moving the lowest income tier customers to a Water Affordability Plan, such as what Michigan Welfare Rights Organization offered in 2005[ref]MWRO Water Affordability Program[/ref], and is endorsed by the People’s Water Board Coalition[ref]A Call to Action! Implement the 2005 Detroit Water Affordability Program, We The People of Detroit[/ref]. Other cities around the country are using the constructs of that plan (Cleveland OH, Portland OR)[ref]Tough times increase focus on affordability programs, Water and wastewater utilities prove compassion isn’t dead by enabling financially challenged customers to maintain vital services. Public Works Mag, Oct 15, 2012 for Portland case study on affordability plan and reference links.[/ref], so when our local officials say they don’t understand it simply means they haven’t held conversation where answers exist.
EPA Rate Options Addressing Affordability
The following is from EPA Region 3 regarding the District of Columbia’s Water and Sewer Authority in December 2002.[ref]Rate Options to Address Affordability Concerns for Consideration by District of Columbia Water and Sewer Authority, EPA Region 3 December 2002[/ref]
Concern for the ability of residents to pay for utility bills is not new. The issue is the ability to pay – not the willingness to pay higher water rates. Because paying for utility services represents a much higher burden on lower income residents than for other residents, water rates are highly regressive by nature. It is not unusual for the MHI (Monthly Household Income) affordability indicator to be well under the 2% threshold for a system as a whole, but for lower income residents, the financial impact of the rates may range from 4-8% of MHI. As a result, lower income residents may face difficult financial choices (e.g., late or nonpayment of bills, reduced service levels) in meeting basic service needs. Affordability problems may be evident through increasing arrearages, late payments, disconnect notices, service terminations, and uncollectible accounts. Reduced revenue collections could endanger the utility’s financial stability and bond rating as well as create public relations problems. Often lower income residents occupy substandard housing with inadequate and leaking plumbing fixtures which contribute to costly wasted water.
WAP is Not Free Water
WAP isn’t a “free water” plan, and that seems to be the stance our local officials keep bringing to the press. WAP would need to have existing assistance funding to offset the lower rates to meet operating costs.
- It would avoid excessive service fees and physical stress on the system being incurred through shutoffs and turn-on cycling.
- It would reduce administrative stress of billing and collections. Last reported 3,000 of 18,000 homes in shutoff status received notice and those were generated randomly. Those notices offered 10 days to come into the office for arrangements. 800 people came forward from those notices delivered. DWSD’s systems are beyond capacity to keep up with the demands placed on them.[ref]Detroit to shut off water to as many as 1,000 households this week. Michigan Public Radio, May 26, 2015[/ref]
- It would ensure families with critical affordability needs wouldn’t be stuck in a debtors prison system trying to make payment arrangements that are outside their ability to honor.
- The assistance plans aren’t working, because they still haven’t addressed the underlying accountability demands of the existing rate system (which is inflexible).
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