WMAC Meeting Minutes January 20, 2011

Attendees:  David Crosby, Chair; Anne Carney, David Hearne, Paul Lauenstein

Guests:  Eric Hooper – Superintendent, DPW; Joseph Roach - Selectman; Ben Puritz – Town Administrator; Nancy Fyler – Neponset River Watershed Assoc;  Chris Woodcock, Consultant

The meeting was called to order at 7:40 PM

Minutes of the meeting of November 19, 2010 were moved, seconded and approved as amended.   Minutes of the meeting of December 2, 2010 were moved, seconded and approved.

Chris Woodcock was invited to the meeting because of his expertise in structuring water rates for communities of all sizes.  To give him some background information Eric explained that the Town currently had an ascending water rate structure that had a minimum bill of $15.00 ($60.00 per year).  Rates were structured on use of 65 gallons per person per day and use over that became expensive.  He also explained that rates from April through September were billed at higher rates.  Eric was interested in how to decouple usage from production costs.  He was interested in ways to determine a fixed cost without production costs added in.  Eric further explained that the Town had a reserve of 3 million dollars a few years ago but that was down very low because the water rates were unchanged for five years.  Rates were increased this past year.  Selectman Roach stated that he had received at least 26 calls after the water committee’s presentation to the selectmen explaining that water rates would have to rise if the Town was going to maintain its infrastructure.  Selectman Roach wanted a procedure to provide for seniors and others who were experiencing financial hardship incorporated into any change in the rate structure.  It was suggested that a hardship exemption administered on an individual basis could be incorporated into a new rate structure.

The main question to Chris Woodcock was how to incorporate operating expenses and necessary capital improvements in a new rate structure without overburdening taxpayers.  The recently completed study showed that 1.3 Million dollars a year was necessary for improvements over the next twenty years.  Should this be done on a cash basis, borrowing or a combination of both?

At this point Chris gave the committee information on the types of projects he had worked on.  He has worked on developing rates in cities such as Boston, New York and Detroit and over 400 other communities both large and very small since 1974.  To begin with, he wanted to know if Sharon had enough water.  Eric said there was enough water and even if the new permit lowered the ceiling amount there would be enough water.  He explained that the Town was pursuing an emergency connection either with Norwood or Stoughton and was looking at an additional well site.  Eric also said that the Town was 50-60% open space and 95% residential.  Chris said that at the present time we don’t need to conserve water, not because we don’t have enough, but because we want to put less stress on the whole system and use less chemicals, less electricity etc.  This is different from communities that just don’t have enough water. Chris said the committee definitely had to keep in mind that as usage due to conservation goes down, revenue goes down and this would mean rates going up just to maintain the same revenue.  He said that water usage in New England was generally going down. Chris felt that this was due to a combination of the economy, the “greening ethic” (conservation) and climate change (recent wet summers). Conservation efforts will probably level off since people need a base amount of water.  He suggested the committee look at basic water needs rather than “wants” to set initial benchmarks for water rates.  He said looking at winter rates was a good starting point for rate development.  He felt that winter water usage is probably in the range of 40 gallons per person per day.  As far as billing, Chris said some communities bill as frequently as every month. He also said that several communities have a base charge and then add to that for water usage.  At this time, David H. asked if towns can bill economically and Woodcock said that it costs about 5 cents more a day to bill monthly.  He thinks billing monthly reminds people of their water usage but he questions how much conservation to reasonably expect.  Chris cautioned that since the predictability of revenue is so  volatile the Town needs a reserve.   An enterprise account needs to fund itself or there are tax implications. Paul felt that peak users in summer drive up infrastructure cost and therefore should pay a larger share of the cost of providing the community with water, rather than charging everyone at the same rate with a large fixed component. 

General discussion followed on what should constitute fixed charges if the committee looked at a rate structure involving a fixed charge for delivery and a charge per gallon of water use.  Cost of billing, cost of meter replacement, postage, and infrastructure costs (improvements) were some of the items that could be included in the “fixed costs” component.  The NSTAR low income rate could be used to determine if someone should get a discount on the water bill. There was some discussion on whether the selectmen should also be the water commissioners.  Eric wanted to know how we could wrap everyone’s ideas together and how we could use Chris as a consultant.  One idea was to have Chris create a spreadsheet incorporating changing rates and block structures that could be easily modified.  The committee has to determine what it wants and then come up with “reasonable” rates to cover expenses, to create a reserve, to cover debt service if capital expense is bonded, and/or to cover cost of capital if not bonded.  Paul wants to incorporate well rehabilitation and new master meters into the budget for the upcoming fiscal year.  David Crosby said we should definitely try to follow the master plan.

The next meeting is scheduled for February 17, 2011

Adjournment at 9:58 PM.

Respectfully submitted

Anne Carney, Acting Clerk