After Two Years of Rate Freezes, Department Cites Need for Future Assets
At a meeting of the City Water Board on April 27th, the City Department of Environmental Protection (DEP) proposed a 2.36% increase in water and sewer rates for Fiscal Year (FY) 2019 despite the continued elimination of the Water Board’s rental payment to the City.
If the proposed rate is approved as is, it will increase the flat rate water and sewer charge from approximately $1,055 to approximately $1,081 per year per apartment (a $2.17 monthly impact) and the average metered bill will increase from $686 to approximately $702 per apartment per year (a $1.36 monthly impact).
Over the last two years, water rates have been frozen as a result of the termination of the rental payment. RSA challenged the water rate increase for FY 2017 that would have raised rates 2.1% for apartment building owners, which would have then subsidized a one-time bill credit of $183 for 1-3 family homeowners. Although the Court of Appeals ultimately reversed two lower court rulings that had upheld RSA’s challenge, the Water Board voted on January 26, 2018 to implement the one-time bill credit but also voted to do so without increasing the rate for apartment building owners and other rate payers.
Last year, DEP confirmed no need for a rate increase ultimately for a second straight year, stating that the “system is in strong financial condition” with the elimination of the rental payment and that an estimated $1.1 billion in cash savings to the system is expected through FY 2021.
Despite these notions, DEP proposed this year’s rate increase as a result of a need to “secure funding for ongoing need to invest in system assets” and “satisfy system objective of moderating future rate increases.” DEP further touted what they believe is a low rate increase by stating that it is an “ongoing benefit from the Mayor’s elimination of the rental payment.”
During public testimony on May 31st, RSA argued that water rate freezes should continue. Mayor de Blasio stated during his campaign in 2013 that if the rental payment was eliminated completely, there would no longer be a need for rate increases. Moreover, if surplus savings were expected as a result of the elimination of the rental payment then at a minimum, any type of rate increase should not be approved until at least FY 2021.
We will keep you apprised in the July/August issue of the RSA Reporter on the outcome of the Water Board’s decision for the FY 2019 rate.