Today’s Tribune has a story about water rates in Methuen. While the story focuses on the immediate consequences of City Council non-action on rates I think it is important to review in greater detail. At the start of this year I appointed a “rate committee” that was made up entirely of City Council members. This committee was created with the knowledge that with a $20 million dollar City Council approved upgrade to our water treatment facility and a multi-million dollar water tank constructed in the East End revenues would need to be generated. That sub-committee met for months, finally reporting out in July. They recommended an increase that was tiered and limited to one year. I will discuss the pros and cons of tier pricing, but that sub-committee approved plan was submitted for Council action in July. City Council failed at that time to vote a rate. That process led to some criticism of the plan we submitted that was at least in part based on trying to get all of the revenue necessary in one year. Additional criticism centered around a desire for a flat water rate. In response I retooled our proposals in two different ways. 1) I gave the City Council two different proposals with one being a flat rate proposal. While I still strongly favor a tiered approach I felt flexibility was called for, and I provided it through an alternative. 2) I spread the impacts on ratepayers over three years, and did so by fully utilizing the $1.2 million in reserves in the water fund. The three year rate proposal was devised to meet the criticism that we were trying to right the system financially in one year.
The bottom line to all of this is that the approved budget for our water department is $5.1 million dollars, while the City Council has provided only $2.9 million dollars through the existing rate. Under those conditions something has to give and hence the story in the Tribune about potential layoffs and water bans. Methuen has not had a rate increase in fifteen years, and our rate after the adjustment will still be the lowest in the Merrimack Valley. There is additional debate to be had about tiered vs flat, and I will do a follow up post on that subject. At this time I will say that water conservation is necessary, and there are some who continue to believe that this commodity is abundant and free. It is not. Read the Tribune story at this link.