Tuesday, May 5, 2015

Vote NO on Article 23

Below is the proposed ARTICLE 23 (including summary) that will be considered at the Annual Town Meeting on May 12.

To see if the town will vote to amend as follows Section 2-601(f) “Water and Sewer” “Water Service” of the General Bylaws of the Town, or take any other action relative thereto.
  1. Delete the phrase “and shall charge for water by measure” from the first sentence of Section 2-601(f) so that, as revised, the Bylaw would read as follows:

    The Department of Public Works shall install and maintain in proper working condition a water meter on each service. The DPW shall require a separate connection for each estate.
The bylaw, as currently written, only allows water related costs of the Water Department to be covered through metered water usage. The change will allow the Select Board, acting as Water and Sewer Commissioners, options on how to cover the costs of the Water Department.

The following was submitted by Curt Freedman of 24 Ridge Road, Longmeadow, MA for consideration....

Citizens of Longmeadow:

There are several reasons that everyone should have concern for Article 23 at this year’s town meeting that will call for an amendment to our General By-Law that has historically established water and sewer fees based on measured use.   Chapter 600, Public Works and Services, section 2-601.f states, “The Department of Public Works shall install and maintain in proper working condition a water meter on each service and shall charge for water by measure.” The By-Law amendment proposes to eliminate the phrase, “and shall charge for water by measure.” 

REASON 1)  If the By-Law amendment passes on May 12th, the plan is for our water bills to have an unprecedented large fixed fee plus a charge for each unit of water that is metered (variable cost).  Our Board of Selectmen have again demonstrated that they do not understand fair and equitable water and sewer (W&S) rate policy.  We will likely never forget the ascending water rate fiasco that the Board of Selectmen unleashed on our community in the summer of 2007 promising only a 15% increase while many customers instead received increases of 40% to 90%.  On 3/4/08, at a special town meeting, the Selectmen then had to give back some $300,000 in refunds to all the customers that were over-charged.  Before our public confidence on W&S rates could be restored, the Selectmen and/or Town Manager then established the Water & Sewer Advisory Task Force to think of other ways to unfairly raise our rates for water and sewer.  The Task Force report confirmed the concerns that I had brought forward to the Water & Sewer Commissioners in 1997 for the sewer cap policy.  Our on-going sewer cap policy causes those who water their lawns to unfairly pay additional sewer fees since excess sewer fees are paid for watering grass and washing cars with no water ever discharging into the sewer.  The existing policy can result in an annual subsidization of over $500,000.  Although our sewer rates are advertised to be $2.35/ccf, the true sewer rate is approximately $3.25.  Based on the Water and Sewer Advisory Task Force report that was submitted to the Board of Selectmen in 2008 and 2011, to make up the $500,000 subsidization, new rates were recommended that would convert the annual customer charge of $34 to a fixed charge of $360 plus a water use charge of $2.00 per ccf (1 ccf = 100 cubic feet = 748 gallons).  It is noted that the above water fee would have to be modified from $2.00/ccf to $2.30/ccf to meet our present revenue requirements.  The problem with this new recommended format is that many customers that have chosen to have minimal outdoor watering could face annual increases of 30% - 145%.  A typical household with one person may have their yearly rates go from $173 to $423, an increase of 145%.   A typical household of two persons may have their rates go from $311 to $487, an increase of 56%. The average household of approximately three persons may have their annual rates go from $408 to $531, an increase of 30%.

REASON 2) The Task Force report specifically stated they did not evaluate how the new policy would affect commercial, institutional, or municipal customers.  Based on detailed analysis, those increases could be 12%.  Not only have the non-residential customers not been notified of such increases, many cannot even speak at the Town Meeting to represent their interests because they may not be registered voters in Longmeadow.  It is unlikely that our public schools budgeted for such increases in their water bills.  I feel that the complete lack of notification and the displacement of appropriate due process are grossly unfair to the non-residential sector and are not democratic.

REASON 3) A much reduced incentive for conservation is another problem with the water and sewer rate changes.  The proposed By-Law amendment could change our incremental unit costs from $5.13 per ccf to $2.00 per ccf.  A unit of water conserved would only save  $2.00 instead of $5.13; any investment in low flow toilets, water efficient washing machines, conservation shower heads or other household water conservation equipment will now have an economic payback some 2.5 times longer.  The new rate is anti-conservation and also serves to economically dis-incentivize the investment and installation of wells for irrigation.

REASON 4) The Task Force in trying to justify the $360 fixed fee, inappropriately claimed that households that do not consume a minimum quota of water do not create enough revenue and do not pay their fair share to the system.  The Task Force is saying that normal household water use is not enough; the Task Force view is that significant irrigation water use is necessary to provide enough revenue to pay a customer’s fair share.   There is no relevance to the Task Force philosophy what-so-ever.  Based on long-standing internationally accepted policies for utility rate design that have also been adopted by the American Water Works Association, preferred utility charges are based on overall variable or marginal costs; the best tariff policy bills a customer for the quantity of product/service that is used, period.  There is no minimum fixed fee other than a customer charge which traditionally is just the cost of administrative billing and the annualized cost for maintaining the meter.  The Task Force with its recommendation for approximately half of the W&S budget to come from the $360 fixed fee per household apparently did not understand, recognize, or observe that for other utilities such as natural gas, or electricity have only a modest customer charge plus a variable charge, billing customers simply for what is used.   A utility based rate is like traveling the Massachusetts Turnpike; a toll is charged only when a vehicle travels or uses the roadway.

REASON 5) Based on globally accepted standards for utility tariffs, the six fundamental features of a good rate design include the following:  simplicity, revenue & rate stability, fair cost apportionment, avoidance of undue discrimination, efficiency, and conservation.  Our present sewer cap and proposed fix fee rate with the By-Law change are:  Revenue and rate unstable, characteristic of unfair cost apportionment, discriminatory, and discourage conservation. 

REASON 6) The traditionally and properly accepted practice is to establish a COST-BASED approach and calculate water/sewer tariff components that are based on marginal costs, not lump sum fixed amounts.  The amended policy is inappropriate and in fact is a textbook example of UNDUE RATE DISCRIMINATION.  A lump sum fixed fee rate creates an unfair level of subsidization and would not be consistent with MGL c. 41: § 69B  and MGL c. 83: §16 that require that W&S charges be  “JUST (FAIR) AND EQUITABLE.”  Furthermore, as Longmeadow’s W&S accounts were approved in 2007 at Town Meeting to be established as “ENTERPRISE FUNDS,” we are also required by law to abide by the Massachusetts Supreme Judicial Court decision: Emerson College v. City of Boston (1984), that mandates that our W&S sewer fees be fairly substantiated; the revenue from one customer cannot unfairly subsidize the costs of the utilization of the system for another customer.  The judges ruled that an unfair subsidization effectively becomes a “TAX” and no longer a “FEE” and would be contrary to Massachusetts law.

Yes, we need change, but the Task Force recommendation requiring our By-Law to be amended is not the answer.  In order to establish fair water rates for all customers, residential customers need to be given the opportunity to utilize irrigation water meters since the cost of service for irrigation (only water, no sewer service) is different than household water use (water & sewer).  Irrigation water meters will provide the only method of accurately documenting irrigation water use which is approximately 40% of the total annual use.  Irrigation water meters have been utilized by commercial customers in Longmeadow for several decades.  Irrigation meters for residential customers are common practice in Agawam, Chicopee, Ludlow, and Springfield; it is long overdue that Longmeadow W&S policy become “fair and equitable”.

As an economic good, our water/sewer system must be managed and maintained properly and remain financially accessible through fair and equitable rates for maximum utilization to minimize cost.  A By-Law change is clearly not needed, a 2nd water meter for irrigation is; we also need our Water & Sewer Commissioners to hold public hearings to exchange information with the public and to enable fair opportunity for all customers to have their interests represented.  A new rate policy allowing irrigation water meters will establish “fair and equitable” water and sewer charges as well as create reasonable pricing signals for conservation and would be consistent with: MGL c.41: §69B, MGL c.83: §16, and Emerson College v. City of Boston.

In 2007, the Water Commissioners with the ascending rates, punished people for watering their lawns, now with the proposed $360 fixed fee, they want to punish people who don’t.  Let us restore fairness, equity, and clarity to our water and sewer rates, please vote “NO” on Article 23 at the May 12th Annual Meeting.

-Curt M. Freedman, PE, CEM, CEA, LEED AP

~ Registered Professional Engineer in:  CT, MA, MD, ME, NH, NJ, NY, PA, RI, & VT
~ Certified Energy Manager (CEM) as endorsed by the Association of Energy Engineers
~ Certified Energy Auditor (CEA) as endorsed by the Association of Energy Engineers
~ LEED Accredited Professional as endorsed by the U. S. Green Building Council
~ Adjunct Professor of Energy Management, Western New England University