Are Everett landlords paying too much for water?
Is the local water authority charging landlords too much for water? Is it legal? Learn what you need to know.
Intro
Many landlords already know that they are paying too much for water in an age of rapidly rising costs across the board. Since the housing crisis and recession started, landlords have seen all of their costs rise as much as %100 to %300 each while tenant incomes fell significantly due to loss of full-time jobs leaving only low paying part-time jobs. Tenant turn-over increased significantly and retention of good tenants largely evaporated as they found it necessary to look for cheaper rent. Landlord losses forced as many as half out of business and into bankruptcy in some areas. For many landlords, their retirement was tied to property ownership and lost everything. In most areas affordable housing stock decreased rapidly and has not returned to pre-crisis levels even in a bullish market. And as landlords track their expenses, the cost of water has increased from one of the lowest expenses to one of the highest even eclipsing traditional major expenses such as the mortgage, taxes, insurance, heating costs, etc.
Many landlords wonder if they are paying a fair rate for water. The answer to this question varies greatly. For some, the answer is clearly No. For others, the answer is Yes. The topic is complex. Here is what I have found.
What you will find here.
I have written this page in six sections:
- Primarily educational background information for reader education. (immediately following and throughout)
- My study data using rate resolutions of water authorities.
- A quick understanding of the Pennsylvania law.
- Analysis and charts illustrating ununiform rates using the study data.
- A landlark case that closely applies to the local water and wastewater overbilling.
- Making a challenge in court.
- Why do landlords pay disproportionally more for water?
- 6 Unit Local Building Billing Rate Compared to Other Townships (chart)
- Local Billing Rate by EDU (chart)
- Price per Gallon by EDU (chart)
- Price for Water per Tenant Based Upon EDU (chart)
- Percentage of Rent ($400) Paid for Water per Tenant Based Upon EDU (chart)
- What have we learned?
- Legal Arguements.
- A landmark lawsuit.
The charts show that local water and wastewater rates are not uniform in a single property class and therefore illegal.
What you will learn.
You will be able to determine if you are being charge illegally for water and wastewater. This page and study will make clear how some water authorities are violating the law with illegal rate setting. If you are a local landlord, you have an undeniable case.
Water utilities are a necessary service.
Utility services are essentials of modern living rather than mere luxuries or conveniences. In any large population center even a temporary failure is serious, and a prolonged interruption is disastrous. Many nonutility products and services, such as food and housing, are necessities, but generally no one company has a monopoly or even a large share of a given market. Since utility services are a necessity, they must be available to all customers on demand.
We use water for cleaning, laundry, cooking, bathing, toilets, and so on. Water is necessary for daily living and touched upon by anyone throughout the day from our morning coffee to brusing our teeth before bed. Our dependence upon water is paramount and we cannot do without it. Water authorities enjoy this advantage.
Water utilities are natural monopolies.
Utilities are often referred to as “natural” monopolies. As capital-intensive enterprises, utilities operate most efficiently as the sole providers of services in a given area. A single system has access to economies of scale that may not exist with multiple systems. In addition, the existence of a single system avoids the costly duplication of facilities.
A natural monopoly exists when the cost of creating a competing infrustructure is so cost prohibitive and difficult that competition is practically impossible. Water is a perfect example. For another to compete, one must obtain permits, dig up streets and sidewalks, connect individual properties, etc. representing astronomical costs and obsticles before the first dollar is earned.
For most water consumers, water can only be purchased from one provider holding the consumer captive to the rates the water utility assigns. Fixed costs that water utilities must contend with means that cost recovery must occur regardless of usage. Water authorities are charged with fairly billing customers for water, however, this does not always happen.
Water authorities and police powers.
Water authorities, and not private water companies, have the authority to place liens and seize property by force using police powers to include the courts, sheriff, and other governmental enforcement. This puts water authorities into another class of utility.
Water rates impact the poor disproportionally.
This should not be a surprise. Whenever costs rise, it is the poor that can afford the increases the least. This is self evident. For the vast number of Americans, they saw full-time jobs evaporate and a limited number of part-time jobs available. Wages had not increased during this time forcing people to work more hours just to stay afloat. For some, staying afloat was not possible forcing them into government subsidies for just the basic essentials. And while in areas where jobs and housing remained in high demand the landlord was able to pass on cost increases effecting the poor in urban areas while more rural landlords were not able to pass on the costs simply because there were not enough tenants that could afford the rent increases. Because one quarter or more landlords are poor themselves, these increases in costs effected how the landlord could serve their customers or their ability to remain in business.
Another effect is where poorer populations in concentrated areas pay more for water than in wealthier areas. There are many reasons for this. SAME LAKE, UNEQUAL RATES is an excellent article on how the Chicago region gets it's water from the same lake and how water rates effect the poor and why.
Yet the sector faces a paradox: water is underpriced, but it’s still expensive (Grigg 2016). As the Black & Veatch report (2016) notes, "issues of affordability" have made rate increases problematic in many communities, requiring water utilities to address "challenging social issues around this matter," thrusting the issue into the political arena as well.
While incomes have increased since the Great Recession, it is not due to rising wages. Americans are simply working more hours. "Nearly eight years after the official end of the recession, median household incomes aren’t much higher than they were when the recession began, and they remain a bit lower than in January 2000." In sum, we are looking at a lost two decades.
Of a households increase in utility expenses, water represents approximately %25 of all expenses. This increase eclispes all other utilities including telephone and cable which represents the second and third highest increase in utilities. Phone and cable utilities are either optional or can be controlled. Water is required for life and often served by only one utility and therefore options to reduce rates through competition impossible.
One quarter of all landlords can be poor too.
I have mentioned it many times, however, it bares repeating. Approximately half of all rentals are owned by small operator Mom & Pop operations. Of these, only half make any money at all often yeilding less profit than the interest of a checking account. Of the remaining half, landlords work full-time just to hold onto their property. In the decade since the housing crisis, some areas saw half of their small operator landlords sell off property, simply close their doors, or even file for bankruptcy. Landlords, as a whole, are not wealthy and many are down-right poor. It is not uncommon that tenants have far more income than the landlord. In over a decade, many landlords have not been able to pass on costs to the tenant due to falling incomes and lack of sustainable jobs.
Municipal water utilities may not be regulated by the state.
Not all municipal water authories are regulated. For example, in Pennsylvania, the Public Utility Commission sates:
However, the Commission does not have jurisdiction over utilities owned and operated by municipalities, cities, boroughs or townships unless a municipality is serving customers who reside outside of its corporate boundaries.
They noted another consequence of giving PUC jurisdiction over the local authorities would be the increased cost that authorities would face when filing with the PUC for a rate increase. They said that could run between $200,000 and $400,000 once all the engineering and attorney fees are added in and the PUC's rate approval process can take months if not more than a year.
There are calls in Pennsylvania for all water authorities to be regulated. For the Pennsylvania Pulic Utility Commission (PUC), this would represent an increase in cost "to include 1,245 municipal authorities that serve 3.75 million customers" according to the PennLive.com article Unresolved water and sewer customer complaints could drive local authorities under PUC's umbrella. Making some requirements of all water authorities can help the consumer. As it exists now, most water consumers are not protected uniformly accross Pennsylvania. Most water authorities ignore complaints simply waving away any complaint of water rates with excuses such as, you have a leak, the rates cover increasing costs, the rates are fair, and the rates are legal. Often consumers must hire an attorney, file a costly lawsuit, hire industry experts, expertly gather and analyze data, and present overwheling evidence for effective change. Most all property owners cannot afford this. Filing a lawsuit is simply not possible for smaller landlords who do not have the means to take on this task. This, in of itself, is a class definition where some consumers are well protected by law and others are not. Equality before the law, in these cases, does not exist.
Here is a portion of the testimony provided to the Pennsylvania Consumer affairs Committee by Michael Bannon, Director of the Bucks County Consumer Protection/Weights and Measures Departments.
I am here today to express my support for House Bill #798 which proposes to introduce legislation that would place municipal water and sewer authorities under the jurisdiction of the Pennsylvania Utility Commission (PUC). Our Consumer Protection/Weights & Measures staff serve over 627,000 residents in Bucks County. There are thirty five sewer authorities as well as thirty four water system providers within the county.
Our role in the Consumer Protection Department is to mediate issues/complaints between our residents and business. We receive complaints on a regular basis regarding water and sewer authorities. The most prevalent complaint however is concerning their billing practices. The problem most often begins with residents expressing their inability to understand their bill and how it is calculated when they read things such as "minimum usage fee" and "multi-meter fee". This has caused much frustration to our residents as the response to their questions via these authorities are rarely quite clear or concise.
Countless times the complaints we receive are because of "excessive water usage fees" imposed on bills. When residents call their local water & sewer authority to question the reason behind this fee, the response is consistently that they, the home owner, "must have a huge leak somewhere in their home". While a leak is certainly a real possibility, in our experience with these companies many times turns out to be a "calculation error" on the part of the authority which they will then correct.
Each "Authority" follow their own set of guidelines for their business practices. Other than utilizing the civil court process, there is no other system in place for a resident to dispute or challenge a discrepancy. These entities have very little accountability regarding transparency of process, billing or customer service for residents that, as a matter of necessity, are forced to pay for their service.
I have heard the opinion that municipal water and sewer authorities are regulated by the D.E.P, however, while the D.E.P. certainly maintains an environmental protection interest, it does not play a part in the consumer protection piece that Pennsylvania residents need.
At this time, I believe that our Pennsylvania residents would be best served by a form of protection concerning transparency and consistency across the board with "Water and Sewer Authorities" by way of these entities being required to report to the Pennsylvania Utility Commission.
Though the effort to require all water authorities has halted, probably through pressure, I support the proposition. After researching this content of this page, I have found that many rate resolutions are poorly written, have omissions, use industry jargon, and unclear, have impossible and usless tier structures, are unlawful and unconstitutional, charge exorbitant rates for water, and require complicated calculations to figure out a bill. Water bills are often not itemized, are uninformative, and disadvantage the consumer. Without transparency, water authorities have not been held to account for their operations, finances, the quality of the water, upgrades and repairs, and billing practices. Without regulation, consumers are left to their own initiative against the water authority who's interest is the status quo. You do not have to look long and hard for violations of water quality and law. For example, Attorney General Josh Shapiro Files 161 Criminal Charges Against Pittsburgh Water & Sewer Authority.
Water prices rise as conservation increases.
As consumers rise to the call to conserve water, the price of water has increased to meet the cost of fixed assets and operational costs and the decrease of revenue from water sales. Water utility costs are not linear to consumption and as consumption decreases, the billing rates needed to be increased to cover costs. Landlords are often required by law or regulation to implement some conservation efforts such as low flow toilets and shower heads. In addition, updated appliances such as dish washers and washing machines are often installed by the landlord to help curb rising water bills. Multi-family property owners, overall, do not water lawns, have pools, allow car washing, have in-unit washing machines and dishwashers, etc. largely depending upon expectation often tied to urban, suburban, or rural locales. As single-family residential water usage habits only declined marginally, landlords have made dramatic cuts to water usage while their water bills increased no less than %100 in the past decade and while paying significantly more for the same water than single-family homes. This confusing mixed-message has frustrated multi-family property owners who have taken on the conservation mantle only to be charged more despite their best efforts.
Of the housing stock in the U.S., %25 are multi-family rentals. Of these, the renters are largely lower income, single, young or elderly, and occupied by just one person. The fact of the matter is that for multi-family housing, the consumption of water is well below the average per unit or per capita than anyother classification of housing. Multi-family housing is often charged significantly higher water rates than anyother classification of housing often many times more for consumption than single-family housing. These costs are passed onto the lower income tenants unduly burdening the lowest income earners. Despite the landlords best efforts, some water rates are so high that conservation efforts make no difference at all despite using half to two thirds less water per unit than single-family home.
One important consideration is where a multi-family is master-metered (landlord pays for tenant water usage) or has individual meters per unit. Individual meters per unit are fairly rare, except for smaller multi-family properties, and may not be possible or affordable for many multi-family facilities. Even then, the property owner is liable for any unpaid tenant water bills where each unit has a separate meter. Water utilities look to individual apartments as a potential customer who would pay basic water rates and therefore charge master-metered multi-family properties as if each unit is a customer regardless. This explains why multi-family property owners pay an exorbitantly high price for water. The benefits are twofold. One, the water authority can legally charge for water where morally, it would not seem reasonable, and two, to encourage the installation of individual meters per unit. Many landlords have installed individual meters especially for smaller multi-family properties as a result of exorbitant water pricing. Mission accomplished. The end goal is to capture, preserve, and assure as much revenue as possible.
Many states statutes require water service rates to be "reasonable," "uniform," "nondiscriminatory," or "just."
Disproportional burden upon smaller landlords.
Landlords well understand that economy of scale is a key factor in their business. For example, if a landlord with with 5 apartment units loses one tenant, they have vacancy rate of %20 and a %20 decrease in revenue while a landlord with 100 units would have a vacancy rate of %1 and a decrease in revenue of %1. This applies to the use of EDUs by the water authority as a single housing unit. For example, a landlord has to pay a base rate for each apartment whether it is occupied or not. This means that a vacancy can cost significant money that cannot be recovered. For example, using our previous example, an empty apartment costs all landlords $151.81 per quarter (locally) however, absorbing this burden virtually disappears with 100 units as opposed to the landlord with 5 units. While this sounds like small money, think of it this way. During the recession, it was not uncommon to lose as many as 5 tenants at a time. This would be a cost of $759.05 with no revenue at all for our example small landlord. This is a real case. A landlord with 100 units would still have revenue from 95 units and can well absorb these costs. The use of EDUs as a single housing unit is a burden whereas the use of EDUs as a block of 5000 gallons of water would automatically and appropriately adjust the rate and remove the burden from smaller landlords.
It is argued that use of EDUs as single housing units assures that all within a class is treated equally. Our example proves that this is a myth. I prove this with solid metrics further down the page.
Water authorities blame rising costs.
Water authorities often cite the cost of repairs and upgrades due to an aging infrastructure, the cots of new environmental requirements such as the Clean Water Act, the cost of new supplies of water, the cost increases of water from other municipalities, and the expansion of services to new housing and business. All of this is true. However, some cite the lack of investment over many decades becoming due and placed on the back of the consumer as water authorities scramble to meet changing cost structures.
Most American buried water pipelines are nearing retirement or are already too old for use. The AWWA reports that cast-iron pipes dating to the 1800s average 120 years of useful operation, pipes from the 1920s last for 100 years, and pipes from the post-WWII era are thought to last for approximately 75 years, so a great deal of subterranean pipelining will have to be decommissioned within the next quarter of a century at a replacement cost of at least $1 trillion, not including treatment plant repairs.
It has been 2,000 years since the Romans built their aqueducts, and 200 years since Philadelphia began using cast-iron water mains. But the 6-inch-wide city pipe that still delivers drinking water to a block on Nixon Street here uses an even more primitive technology: wood. ... Water officials say they believe that a handful of wooden water mains are still in use in South Dakota, Alaska and Pennsylvania, among other places. ... And they are bursting with alarming frequency in many areas these days, particularly in systems coping with septuagenarian, octogenarian, and even century-old pipes.
The plain truth is that much of our water infrustructure has not been replaced in the past decades except where necessary. Investment in preventing water waste was not always made.
Overall, break rates have increased 27 percent in the past six years. Utilities should be concerned that break rates for cast iron (CI) and asbestos cement (AC) pipes, which together represent almost half of the installed water mains in North America, have increased 46 and 43 percent, respectively, since 2012. Together, CI and AC pipes are mostly responsible for the spike in pipe failures. CI and AC pipes are no longer manufactured and are now reaching the end of their expected lives.
According to the survey, an average of 0.8 percent of installed pipe is replaced each year across the country. This equates to a 125-year national pipe replacement schedule. Pipe replacement rates should be between 1 percent and 1.6 percent, equivalent to 100-year and 60-year replacement schedules, respectively. In general pipe replacement rates need to increase.
In its most recent strategic assessment of the water industry, Black & Veatch (2016) observed that "those working in the water industry have realized a truth that is now reaching a broader audience: Water is woefully underpriced."
This may be true. However, it may be that not all property owners are sharing the cost burden equally based upon usage in all areas. For some rate structures, some classes of property owners are penalized heavily while others are not. For example, hotels, bars, clubs, and restaurants use high amounts of water, but are often not billed proportionally for that usage. Multi-family property owners often pay more despite lower usage rates.
Why do landlords pay disproportionally more for water?
- The belief that multi-family dwellings are disproportionally burdensome on water supplies.
- The belief that landlords are a wealthy source of revenue.
- The water authority has not properly studied water usage.
- The water authority takes clues from other water authorities.
- Lack of employee training and skills.
- Multi-family properties classified as commercial.
- Assumption that lack of complaints means that rates tiers are correct.
- Ignorance of applicable laws.
- The popular notion of encouraging conservation in the rate resolution.
- Problems with billing systems design and use.
- Lack of study of billing rate effects and accuracy.
Let's take a few of these briefly one at a time.
The belief that multi-family dwellings are disproportionally burdensome on water supplies.
The belief that multi-family dwellings are disproportionally burdensome on water supplies is largely a myth. Except for the obvious high density of population in a smaller area such as in a city or a larger complex, there are no supporting facts to state that multi-family properties are more burdensome than single-family homes based upon occupancy, occupant age, and other factors. Occupancy laws often restrict how many people can live within a rental unit or condominium. For example, a one bedroom apartment unit often limits the unit to two persons where no limits exist for single-family homes. Most single-family houses have multiple people living within the unit where this is far less true for multi-family units overall. Single-family units have more families and couples whereas multi-family units have older often retired or younger single adults. Single-family houses often have more appliances such as dish and clothes washers that use water than multi-family units. Single-family houses see more lawn watering, car washing, swimming pools, and other uses as well. The simple fact of the matter is that on a per-unit basis, multi-family units not only have a lower occupancy, but are far more conservative of water resources. This is a water utilities dream is it not? Here are some example water usage statistics from The Water Research Foundation comparing single-family and multi-family water usage. You will notice that multi-family water usage is far less than single-family usage per unit.
| City | Single-Family | Multi-Family |
|---|---|---|
| Denver | 271 | 133 |
| New York | 202 | 170 |
| Phoenix | 331 | 182 |
| San Diego | 308 | 164 |
| Tampa Bay | 191 | 117 |
It is a universally accepted fact within the industry that multi-family units represent a lower per-capita burden upon a water utility than single-family units. And yet, water authorities like to use the increase burden myth as a excuse to charge more. Again, sometimes this is appropriate. For smaller multi-family properties, the excuse rings hollow.
The belief that landlords are a wealthy source of revenue.
Landlords face countless regulations and laws moreso than most businesses. They are used to jumping through hoops, paying fees, fines, taxes, and so forth as a cost of doing business. Public attitudes toward landlords is so poor dispite the fact that nearly half of all landlords self-identify as being motivated by the idea that people deserve to have quality affordable housing at an affordable price. When the recession hit in 2008, municipalitites, utilities, government agencies, etc. refused to tighten their belts as everyone else, and raised costs the landlord faced between %100 and %300 each without regard to whether the landlord or the landlords tenant could afford such an expense. For much of the country, tenant wages actually dropped during this period and full-time jobs evaporated. Landlords where largely left footing the bill. Wealthy and poor landlords alike soon were out of business. Only the wealthiest or the scrappiest of landlords survived. When a utility is the only source of water, electricity, gas, etc., then the utility has the power to make any demand they want without regard to market forces that landlords must pay attention to. Worse yet, if that utility is a governmental agency with police power, the landlord may stand to lose their property and investments. For many landlords, this is their retirement; every penny they have. Whole lives have been ruined just this way. And consider that when a landlord disappears, affordable housing disappears.
Another arguement is that revenue generating property can be taxed through utilities. And while water utilities do not have the power to tax, municipalities, counties, and states often tax water authorities who pass the tax onto their customers. In addition, water authorities often add fees to their rate structure for reinvestment and other costs. These fees are not always shared equally between all classes of customers. It is easier to justify adding expenses to properties that are revenue generating than single-family homes. The attitude is this: For the privilege of earning money on your property, we will charge you more. Afterall, you can afford it. Just pass the cost onto your customers. This is not always possible.
The water authority has not properly studied water usage.
Not all water authorities study water usage as a periodic or ongoing process. Assumptions are made based upon older usage studies that can be a decade old or more. Because not all water authorities are regulated, requirements for usage studies may not exist.
The water authority takes clues from other water authorities.
Water authorities often take clues from other water authorites when setting rates. This is understandable, however, following the lead of another can result in illegal rate setting. To use an example from another situation, one lawyer wrote one local towns laws by cutting and pasting from another set of laws of another town he previously worked on. These were also cut and pasted from yet another towns laws by the same lawyer. The lawyer admitted that some of the laws are clearly unconstitutional. I hired him immediately to defend against one of these unconstitutional local laws and won without a fight. The same can be true of water rates. Water authorities have the responsibility to ensure that their rate resolution is legal and just. Simply doing what another water authority has done without consideration of wether the rate scheme is legal or appropriate is to abdicate their responsibilities under the law.
Lack of employee training and skills.
Not all water authority employees are trained or trained well. Add to this, many cannot consider legal matters due to ignorance of the law. Many are simply hired as clerks or other professional without specific history in the industry. Part of the reason for this is that townships may not see the necesssity to hire a professional with specific skills within the industry for a job that is primarily administrative. Another issue is that professionals with specific skills in the industry may not be available or too costly. This is especially true in rural areas. Add to this, there may not be much if any requirement for specific industry training and any training is "on the job" which can vary wildly. Another thought is that water authority employees can rely upon consultants and attorneys. The problem with this idea is that constulants and attorneys can give bad advice and the water authority employee would not be able to determine good advice from bad advice.
Through no fault of their own, many employees in charge of preparing monthly bills have inadequate training and/or skills to handle increasingly complicated billing software. This becomes particularly evident in extracting monthly water use and water/sewer billing data needed for a rate study. Managers often assume that since monthly bills have, to the best of their knowledge, been sent without a hitch, accounting staff must therefore be experts at managing the billing software. To compound the problem, governing bodies also often assume they can adopt a new rate structure, and that it can and will be implemented the very next month, with little time to train staff, conduct an audit, or verify that the new bills are accurate.
Multi-family properties classified as commercial.
Most water authorities assume that all multi-family properties present an increased burden upon the water authority. This is a largely myth. As part of rate setting, water authorities follow the lead of tax authorities who may classify multi-family properties as commercial. The attitude is that since multi-family properties are revenue generating and believed to be a greater burden upon the water system, the water authority can charge more than single-family homes or other properties. This is understandable, however, this is often without a full consideration of other property types or the truth. For example, a restaurant is also commercial and uses a lot of water each day. And yet, often multi-family properties and restaurants are classed differently and the restaurant may be paying much less per gallon for water. All of this depends upon scale. For example, a small multi-family property is significantly different than a much larger complex which would create a greater burden upon the water authority. Some water authorities classify properties based upon the connection. This can make more sense. The following is taken from How much water can flow through a pipe (GPM/GPH)?.
| Copper Pipe Sizes | GPM | GPH |
|---|---|---|
| .75 Inch | 11 | 660 |
| 1 Inch | 16 | 960 |
| 1.25 Inch | 25 | 1,500 |
| 1.5 Inch | 35 | 2,100 |
| 2 Inch | 55 | 3,300 |
A single-family home typically has a .75 inch or a 1 inch connection. A small multi-family property can have a 1 inch, 1.25, or as much as a 1.5 inch connection, though most are likely 1 inch or 1.25 inches. The increase in water flow rate from .75 inch to 1 inch is %145.45 and the increase in water flow rate from .75 inch to 1.25 inch is %227.27. The increase in water flow rate from 1 inch to 1.25 inch is %156.25 and the increase in water flow rate from 1 inch to 1.5 inch is %218.75. This means that peak and nominal usage of a multi-family property with a 1.25 inch connection cannot exceed 1.56 times the flow rate of a single-family home with a 1 inch connection and cannot exceed 2.27 times the flow rate of a single-family home with a .75 inch connection.
Another consideration what water mains are required to supply water to a customer. For example, larger commercial customers may require a larger water main. The cost difference in using a larger water main means a different cost structure for providing water and therefore potentially higher rates. For most landlords, the water main they connect to is the same as ordinary residential customers. This is not always the case in highly populated areas such as cities, however, in other largely residential areas most landlords are using the same water as that single-family home a few doors down the street.
According to AWWA (American Water Works Association), the rate of investment differs by connection size. From AWWA M1 Principles of Water Rates (6th Edition). I have included it for comparison.
| Meter Size | Meter Size Ratios Based on Investment |
|---|---|
| .75 Inch | 1.1 |
| 1 Inch | 1.4 |
| 1.5 Inch | 1.8 |
| 2 Inch | 2.9 |
Keep these tables in mind. They speak to the actual physical burden upon a water system.
Assumption that lack of complaints means that rates tiers are correct.
Assuming that a lack of complaints means that rate schedules are correct is a serious mistake. Landlords are busy people and weigh the return of investment wisely. This means that a costly challenge to the water rates may not always make sense. However, with significant increases in costs to the landlord since the recession, landlords are beginning to push back against unfairness where they find it. The results of a cost analysis of water rates versus the cost of a court challenge is changing. For some, a challenge would not make sense. For smaller landlords, who often cannot afford to make a court challenge, the cost benefit ratio of making a challenge means being able to stay in business or not. For some, it can mean bankruptcy or not. For others, it means being able to keep their retirement or not.
Ignorance of applicable laws.
Many water authorities do not have expertise in legal matters though most all have access to attorneys. In cities, attorneys would be on-staff and in more rural areas, attorneys would be on-retainer. Still, with all this access to legal counsel, many attorneys are not experts in rate setting. Most water authorites must rely upon industry expert consultants and attorneys who are expensive. Even with that, many of these experts follow existing standards and do not always look to previous and recent legal decisions as risk aversion. Some do get it right. Water authorities, with all the best intent, may be asking attorneys for advice and getting short answers without full and proper analysis. I have seen this in other areas of law. For example, a police chief sought advice on a matter where the law was absolutley clear. The attorney advised contrary to law off the cuff without even looking at the law in question. This is very common and may give a water authority false confidence in their rate setting practices.
The notion of encouraging water conservation in the rate resolution.
The principle is simple: to achieve conservation, just charge high rates.
Most water authorities assume that all multi-family properties present an increased burden upon the water authority. This is a largely myth. I have said this several times now. The point must be driven home. For that reason, multi-family property owners may pay significantly higher rates than all or most other property classes dispite their actual water usage rates. With the same attitude as water authorities, conservation advocates see multi-family dwelling units as a prime target for water conservation simply because they feel this is where the greatest effect of pricing can be used to encourage conservation. Both see setting higher rates as a good for encouraging conservation regardless of the fact that multi-family units use far less water than single-family units. One reason why multi-family units are charged more regardless of reduced water usage is revenue stability for the water authority. Landlords are being targeted twice; once as a primary target of conservation and again for revenue stability. This admission is written in studies by advocates and in practice by water authorities, makes clear that not only are landlords treated differently as a class of property owners, but that treatment is unequal and intentional. Equality before the law requires that no one individual or group of individuals be discriminated or privileged by law. Conservation through unequal price signaling is unconstitutional. Make no mistake about it.
One common conflict is the tension that arises between promoting water conservation and ensuring a stable revenue stream to cover the predominantly fixed charges of running a water utility.
The amount that customers pay for water service acts as a price signal, often encouraging the customers to decrease consumption. A utility charging high rates typically discourages large volume use among many residential customers.
Encouraging water conservation is not purely a social act. It is intended to reduce costs in systems expansion and upgrades. The conflict becomes evident as rates are increased and conservation is realized, revenue often decreases causing instability. One school of thought is to charge a larger base rate for all consumers to stabilize revenue. Another is to use a lower base rate with increasing volumetric block charges. Still another is to charge summer rates where water usage is the highest and conservation most effective.
Customer Classes/ Distinction
Utilities have several options in deciding how to charge different sets of customers. However, utilities can only legally charge different rates for customers based on costrelated factors, such as usage. Hence, it is possible to set a rate structure for residential customers and a separate rate structure for commercial or industrial customers, since the non-residential customers use a lot more water and the marginal cost of providing them with additional units of water is very low. One advantage to creating different rate classes of customers is that it provides the utility with greater flexibility in targeting different objectives for different types of customers. For example, a utility could charge increasing block rate structures for residential customers to encourage conservation but also charge uniform rates for non-residential customers to avoid overburdening them with excessively high rates.
Price signalling is the primary tool for conservation. Making water more expensive does, in many cases, curtail water usage, however, as water usage declines so does revenue and drives the price of water up to recover costs. The goal of conservation is to curtail expansion and upgrade costs by placing a more downward curve on usage trends. This makes sense. However, for the consumer, this means that the consumer essentially pays twice; once in higher price signalling schemes and again when prices go up to cover revenue shortages.
Problems with billing systems design and use.
Water billing systems can be complicated and require specific professional training. Some are limiting in how a water authority can bill a customer. Because water billing software can be complicated, some smaller water authorities chose rate resultions that are significantly simplified and without much regard to how the rate resolution effects consumers. In some cases, simplified rate resolutions are grossly unfair to one or more class of consumer. In addition, software bugs have resulted in significant errors in billing. Even without bugs, significant errors can be made by not understanding the software. Since some water authorities do not model and test changes in billing rates, bills have gone out charging rates that are ridiculous.
LEAGUE CITY, Texas (KTRK) -- A software glitch in League City led to residents being erroneously charged hundreds and hundreds of dollars on their water bills.
The problem boils down to a computer system error, Raddatz said. "With our billing system what happened was instead of grabbing last year’s meter read as an example for what we should estimate this time, it pulled last bill for the customers," she said. Tony Diehl is one person who was overcharged. He said Suez did adjust his bill when he called them, but he is still concerned. "It was an estimate instead of reading the meter. It was actually six times the usage for the same period as last year," he said. Normally, his bill is around $35 this time of year, he said, but this time it was $115. "Checked with our other neighbors," he said. "My neighbor on the other side, they were charged nine times the usage of what it was for the same period of last year."
Hundreds of customers of Baltimore’s water system were hit this week with bills of more than $50,000 each. The Baltimore Department of Public Works said Thursday that officials are reaching out to 566 customers who were sent "erroneous inflated" bills. City officials blamed the incorrect bills on a weekend software upgrade that created problems. "Despite extensive testing of the software, on Wednesday, Feb. 7, the Customer Support and Services Division learned that some bills went out with extraordinary amounts," the city said in a statement.
A group of Augusta water & sewer bills was mailed earlier this week that contained an error in the application of the monthly base charge. The Augusta Utilities Department is working with the software vendor to determine the cause and to make corrections.
In April, Ricardo Torres received a quarterly water bill for a 1,500-square-foot home charging him $180,918.68, plus more than $9,000 in late fees. The utility company claimed he consumed 1.5 million gallons of water – the equivalent of three Olympic-sized swimming pools -- in three months.
This last case was a meter read error as is so many others. However billing systems, audits, and employees should be catching these errors before the bills go out.
Lack of study of billing rate effects and accuracy.
Not all water authorities test the effects of their rate resolution. Pennsylvania, for example, requires that rates be "just" and "reasonable" as well as "reasonable and uniform". Not all water authorities study the effects of their rate setting and how it effects consumers especially in light of legal and constitutional considerations. Many water authorities assume that they have the authority to set rates the way see fit for their purposes. Nothing can be further from the truth. Laws allow the definition of classes, setting tier pricing, charge for peak demands, charge for connection sizes, charge for burden to the water system, charge per equivelent dwelling unit (EDU), and so on. Water authorities will use these legal methods to create their rate resolution. However, water rates are to be fair and equitable and without testing the effects of a rate resolution, water utilities often run afoul of constitutional considerations. Not all rate resolutions are legal despite using methods of rate setting allowed by law.
While water authorities may model and test their billing strategies to meet goals, many do not study the effects of their billing rates on consumers. For example, for a multi-family property, the water authority should not only ask, Is the billing rate fair?, but also What is the effect upon rent payers? Often, renters are paying a larger proportional amount for water dispite the lower usage. Often renters are lower income. In some cases, higher water bills cross racial lines as they do in Chicago. Water authorities often do not study these effects. As well, water authorities do not always audit the accuracy of their rate setting. Field rate studies, audits, and simple validation of billing data does not occur as it should. Why would a bill for $189,918.68 or more than $50,000 as the quoted cases above exist otherwise? There is no excuse for sending out bills that are so out of scope and then holding home owners responsible and threatening to terminate their service for non-payment. Mistakes will happen of course. However, failure to audit billing results is inexcusable regardless of the size of the water authority.
What is a Rate Resolution?
A Rate Resolution is the published rates by which a water authority bills its customers along with all other pertinent customer billing information. Rate Resolutions should have other language regarding contact information, payment schedules, collection policies, meeting schedule, etc.
What is the definition of an EDU, DU, ERU, EMU, EM, or SFE?
EDUs (equivalent dwelling unit) may also be known as DU (dwelling unit), ERU (equivalent residential unit) or EMU (equivalent meter unit), EM (equivalent meter), and Single-Family Equivalent (SFE) are defined as such.
- Defined as any room, rooms, or space, intended for occupancy as living quarters for a family, persons, or by a person living alone.
- Defined as any office, store, shop, restaurant, club, tavern, service station, funeral home, other similar commercial establishment, or any religious or fraternal or governmental establishment.
- Defined as a motel, hotel, and school, industrial entity, and as each 54,000 (number may vary) gallons or less of water used per year.
- May be defined as a single water connection. For example, a factory may have more than one water connection.
- May be defined as a block of water consumption.
The one hand, the notion of each apartment being a EDU seems to make sense. It is a single dwelling unit. On the other hand, it does not make sense at all. Apartments are often occupied by fewer people per unit who use less water. This can be restriced by occupancy laws. For example, that one college graduate or elderly adult will use less water than a family of three or more in a single-family home. To count a single apartment as a single EDU is very often not equivalent to a single family home, and yet, water authorities count them as such.
One of the fairest and simplest uses of EDU is the block of water consumption. For example, 5000 gallons of water. The use of EDU as a block of water consuption automatically scales to usage and burden. This use of EDUs is as fair to the consumer as possible. And yet, not too many water authorities use this method.
What is a class?
Establishing customer class and rate setting is a complex and technical process. No doubt. With acquisition, consumption, fixed costs, law and regulation requirements, taxation, operating expenses, depreciation and amortization, and other factors water utilities are bound by factors that cannot be ignored.
Utilities normally seek to limit the number of rate schedules used to those necessary to recognize broad categories of customer service characteristics, designing the schedule for each so as to recover the costs allocated to it and to encourage, through appropriate unit prices, the optimum utilization of service in areas of lowest cost.
Many of us would naturally recognize that there are quite a few property classes; homes, apartments, condo, bars, clubs, restaurants, stores, commercial, etc. Water utilities create classes upon characteristics of usage or cost. For example, connection size, peak usage, total water usage, cost to serve a particular area, etc. So as we recognize property classes, water authorities see properties differently and may class them according to characteristics inorder to recover costs.
Classes are to be designed to adjust rates by class of customer to make rates equatable. Years ago, multi-family properties were either moved from residential to commercial or another class such as multi-family. This was intentional based with the thought that multi-family properties create an undue burden upon the water utility. However, as mentioned, multi-family rental properties are more effient users of water than anyother class including condominiums. Each class is represented in the rate schedule of the water utility. Some water utilities have just one rate. Some have a few rates. Many more urban water utilities have several. For example, New York has a rate structure that includes walk-up apartments versus apartments with an elevator. What does an elevator have to do with water consuption? Classes are intended to account for the cost of supplying water to a particular group of customers. For many water utilities, the cost differential is minimal if it exists at all. For others, this is a real consideration. For example, an apartment building with 10 units likely does not cost the water utility much more to service the building than a single-family home, however, a 100 unit apartment building will require more infrustructure cost.
The AWWA M1 Principles of Water Rates (6th Edition) classifies multi-family properties over two units as Commercial.
Commercial: Multifamily apartment buildings and nonresidential, nonindustrial business enterprises
One common consideration is the size of the connection to the building. A single-family home may have a 3/4 or 1 inch connection where are a small apartment building or restaurant may have a 1 or 1.25 inch connection. Clearly there is little difference and connection and water meter costs would be largely minimal. For exmaple, water meters would typically cost a home owner $100 to $250. Water authorities can buy water meters cheaper than we can. Water flow rates vary slightly from one connection size to another for most of us. Connections are one-time costs along with maintenance costs that occur approximately every decade. In these cases, it may not make much or any sense to create a class and rate structure for such a connection.
Many multi-family properties such as apartments are often counted as individual units known as EDU (equivalent dwelling unit), DU (dwelling unit), ERU (equivalent residential unit), EMU (equivalent meter unit), EM (equivalent meter), and Single-Family Equivalent (SFE). This designation is used for rate setting. For example, flat fees, minimum base fees, block consumption usage, and consumption fees per 1000 gallons are often tied to the number of units a single master-meter connection serves. The use of EDU (el al), if not carefully calcualted, can easily skew water rates unfairly passing this burden onto landlords and tenants who may or may not be poor. And while I do agree that use of EDUs can be appropriate in rate setting, how a water authority chooses to set rates for multi-family properties must be carefully considered, tested, and implemented.
What is a sub-class?
Within a class of water customers, you may have sub-classes that further breakdown the type of customer. For example, for the class of multi-family properties, you can have duplexes, apartments, condos, etc. You may want to study your local rate resolution for classes and any sub-classes defined by the water authority and how rates are applied.
Comparing water rates with examples.
Some water authorities charge a flat rate for water. This is fairly rare and generally reserved for those properties that do not have a meter.
Most water authorities charge a slightly different rate from one class property to another. For example, single-family home or multi-family property. This is fairly common.
Some water authorities use EDUs and sometimes the connection size to set rates. For example, a single-family home is one EDU and a multi-family property would have one EDU per apartment or condo. This could be a flat rate per EDU though that seems rare. Most rate resolutions charge a slightly different consumption rate for multi-family properties based upon the number of units (EDU).
The most common method of establishing class seems to be based upon the connection size. For example, 3/4 inch, 1 inch, 1.25 inch, etc.
Another method is to charge per unit of water consumption. 1000 or 5000 gallons is common, however, a unit could be anysize.
One very rare method is to use metrics such as square footage of the home or apartments, the number of sinks, showers or tubs, toilets, clothes and dish washers, yard size, and so on to set rates. Peak Water Demand Study studies water usage based upon plumbing fixtures.
Finally, some water authorities charge different rates during seasons, for example, during the summer when water use is higher. Even where seasonal rates are not used, most water authorities use winter usage rates to set pricing throughout the year.
Rate setting methods are defined as such. This list and the following definitions are partially taken from AWWA M1 Principles of Water Rates (6th Edition) and North Dakota Small Community Water System’s Handbook on Developing and Setting Water Rates.
This list is somewhat abbreviated and does not include bulk, fire prevention, outside-city, standby, drought, and marginal water rates.
- Flat Rate (Fixed Charges)
- Uniform Flat Rate
- Single Block Rate
- Decreasing Block Rates
- Increasing Block Rate
- Seasonal Rates
- Water-Budget Rates
Flat Rate (Fixed Charges)
Cost-of-service water-rate designs typically include both a fixed and a variable charge. The fixed charge in a rate design may take many forms, but this portion of a customer’s bill will be the same, or fixed, for each bill regardless of the amount of water the customer uses.
Uniform Flat Rate
A uniform water rate is expressed as constant price per thousand gallons or price per hundred cubic feet.
Single Block Rate
Customers are charged a constant price per gallon regardless of the amount of water used. Often coupled with a minimum charge for having service available.
Decreasing Block Rates
A decreasing (or declining) block rate is a rate structure in which the unit price of each succeeding block of usage is charged at a lower unit rate than the previous block(s).
Increasing Block Rate
Increasing block rates (also known as ascending, inclining, inverted, or tiered block rates) charge increasing volumetric rates for increasing consumption. Increasing block rates require metering and defining consumption blocks over which rates increase. Increasing block rates should usually be designed by customer classes (i.e., groups with similar usage patterns).
Seasonal Rates
A seasonal rate is a form of time-differentiated rate, or a rate that varies by time period. It establishes a higher price for water consumed during a utility’s peak demand season, usually reflecting the increased costs of providing service during those periods. The objectives of seasonal rates are to better match price and cost recovery with demand patterns, and provide a price incentive for customers to reduce their consumption during peak season or use periods.
Water-Budget Rates
A water-budget rate structure is a form of increasing block rates where the amount of water within the first block or blocks is based on the estimated, efficient water needs of the individual customer. Water-budget rates differ from other metered water rate designs in two key ways. First, the blocks are established based on points that represent varying levels of each customer’s efficient water use. Second, water-budget rates require the utility to set specific standards for what is, and what is not, considered efficient water use for an individual customer. Other metered rate designs may address efficient water use, but not in this direct manner, nor do they directly account for efficiency of use when determining a specific customer’s bill.
The most common rate setting method is the increasing block rate. Increasing block rates may include EDUs to set tiers.
Water Subsidies.
While not included in my list of rate methods, subsidizing water consumers is a large and somewhat shadowy process. We all think we understand subsidies, however, not all subsidies are apparent. For example, there are subsidies that people can apply for. Less obvious, water rates are sometimes designed by the water authority where one customer subidizes another creating inequality in the rate resolution. In some cases, the cost of water acquisition is subsidized, while in others, tapping fees are subsidized. Low income water rates are subsidized through property taxes in some cases. Where a water authority subsidizes one consumer by charging another is very likely illegal. There is little information available on this topic, however, some water authorities do make mention of subsidies through rate setting.
The solution described to "impose outsized cost burdens on higher-income households served by the systems" is illegal and not allowed under the current restrictions of State law and Proposition 218. Charging higher rates for some customers to subsidize lower rates for other customers is illegal.
The description in Footnote 5 is not accurate as it relates to water service. Proposition 218 also requires that property related assessments such as water service be proportional to the benefit received. That is the main challenge for water service providers, charging higher rates for some customers to subsidize lower rates for other customers is illegal.
Evaluating a (local) rate resolution.
Here is the local rate resolution.
| Service | Rate | Rate per Gallon |
|---|---|---|
| Water | $39.32 | First 5000 gallons. |
| $3.04 | Per 1000 gallons over 5000. | |
| Sewer | $112.49 | First 5000 gallons. |
| $9.37 | Per 1000 gallons over 5000. | |
| Combined | $151.81 | First 5000 gallons. |
| $12.41 | Per 1000 gallons over 5000. | |
| Bulk | $12.26 | Per 1000 gallons. |
You will notice that the rate resolution, simple as it is, does not define the rate for multi-family properties. If you were an owner of an apartment building, you would expect to pay $151.81 for the first 5000 gallons and $12.41 per 1000 gallons thereafter. This is not the case. The water authority charges the base rate of 151.81 per EDU (apartment). Understanding that multi-family properties are chaged per EDU, you would think you see three tiers in the rate resolution; bulk water, multi-family, and everyone else. However, all residential units are one actually one single class. This rate resolution has 2 classes, and 3 tiers. You will see why this is a problem as we go.
For apartment owners, the water bill would be the Combined rate times the number of units (EDU). For example, a 10 unit apartment building would be $151.81 x 10 = $1518.10 per quarter allowing for 50,000 gallons before being charged additional water usage rates.
Example water bills.
Here are some example water bills for a 6 unit apartment building. And yes, these are real bills. I like these examples because they represent the spread, small, medium, and large.
Each apartment has one tenant. One tenant is partime only there on the odd weekend leaving five tenants residing within the building full-time. There are no clothes washers, dishwashers, pools, or car washing on-site leaving water usage to bathing, cooking, and other toilet uses. The question you should ask yourself is, Are these local water bills fair? I will compare them to the water/sewer rates four other towns.
| Service | Consumption | Charge |
|---|---|---|
| Water | 14,000 | $235.92 |
| Sewer | 14,000 | $674.94 |
| Total | $910.86 |
| Service | Consumption | Charge |
|---|---|---|
| Water | 19,000 | $235.92 |
| Sewer | 19,000 | $674.94 |
| Total | $910.86 |
| Service | Consumption | Charge |
|---|---|---|
| Water | 27,000 | $235.92 |
| Sewer | 27,000 | $674.94 |
| Total | $910.86 |
The first thing you would notice is that regardless of water usage, which can vary by quite a bit, the apartment owner is charged the same rate per quarter. 36,000 gallons is the most used per quarter resulting in additional charges. This has only happened once that I can see. The spread between 14,000 and 27,000 is fairly representitive as I go through older bills.
One other consideration for those who are looking at their waters bills. Not all water bills show gallons but rather show units of consumption in which 1 unit is typically equal to 748 gallons or 1000 gallons. Not all units as a measure is 748 or 1000 gallons so you will want to check with your local water authority. The local water authority switched from units to gallons on their water bills somewhere in 2017 or 2018. If the number is low, multiply it by 748 or 1000, depending upon which unit size is used, and you will see the consumption in gallons. There is one other consideration regarding units. Gallons should normally reflect a more accurate consumption rate. With units, you are shown blocks of consumption and not actual consumption. For example, assuming a unit is 748 gallons, 749 gallons is 2 units as well as 1496 is 2 units. The local water authority, despite the change to gallons on the water bill, still seems to calculate bills using blocks of water in units of 1000 gallons. This may be a restriction of the billing software, or simply something the water authority calculates as a matter of policy. Taking this a step further, you can take your gallons and divide it by 748 or 1000 and round up to the next integer. This would be the number of units.
Now let's compare the example multi-family charges to a local single family home using the same rate resolution as a matter of scale. Single-family property owners are not paying the same price for equal amounts of water as multi-family property owners. This table represents the surcharge local landlords are paying under the guise of being a higher burden upon the system.
| Multi-Family Charge | Single-Family Charge | Consumption | Difference |
|---|---|---|---|
| $910.86 | $263.50 | 14,000 | %345 |
| $910.86 | $325.55 | 19,000 | %279 |
| $910.86 | $424.83 | 27,000 | %214 |
Comparing local rates using the bills above to Altoona Pa.
Here is an example from the Altoona Water Authority Water Rates and Altoona Water Authority Waste Water Rates (abbreviated).
| Meter Size | Base Charge Per Month | Capital Surcharge |
|---|---|---|
| 5/8 Inch | $29.03 | $1.54 |
| 3/4 Inch | $29.03 | $1.54 |
| 1 Inch | $54.77 | $2.90 |
| 1.5 Inch | $101.46 | $5.38 |
| Per Month | Per 1000 Gallons | Amount |
|---|---|---|
| First 1,667 Gallons | $1 | $1.67 |
| Next 2,333 Gallons | $11.08 | $25.85 |
| Next 26,000 Gallons | $8.41 | $218.66 |
| Meter Size | Base Charge Per Month | Capital Surcharge |
|---|---|---|
| 5/8 Inch | $20.88 | $1.94 |
| 3/4 Inch | $20.88 | $1.94 |
| 1 Inch | $34.31 | $3.19 |
| 1.5 Inch | $70.20 | $6.53 |
| Per Month | Per 1000 Gallons | Amount |
|---|---|---|
| First 1,667 Gallons | $1.20 | $2.00 |
| Next 2,333 Gallons | $9.95 | $23.21 |
| Next 26,000 Gallons | $8.75 | $227.50 |
Now let's compare the bills above to the Altoona water authorites rates.
| Gallons Water / Waste Water | Local (total) | Altoona (total) | Difference |
|---|---|---|---|
| 14,000 | $910.86 | $318.03 | %286.41 |
| 19,000 | $910.86 | $403.83 | %225.56 |
| 27,000 | $910.86 | $541.11 | %168.33 |
It is important to note that Altoona has 44,098 residents as compared to the local population of 1,748.
Comparing local rates using the bills above to Waynesboro Pa.
Here is an example from the Waynesboro Water Authority (abbreviated).
| Water Quantity | Charge | Minimum |
|---|---|---|
| First 5,000 Gallons | $8.87 per 1,000 Gallons | $44.31 minimum |
| Next 25,000 Gallons | $4.46 per 1,000 Gallons |
| Sewer Quantity | Charge | Minimum |
|---|---|---|
| First 12,000 Gallons | $8.21 per 1,000 Gallons | $41.06 minimum |
| Over 12,000 Gallons | $6.68 per 1,000 Gallons |
Now let's compare the bills above to the Waynesboro water authorites rates.
| Gallons | Local (total) | Waynesboro (total) | Difference |
|---|---|---|---|
| 14,000 | $910.86 | $185.23 | %491.75 |
| 19,000 | $910.86 | $252.07 | %361.35 |
| 27,000 | $910.86 | $341.19 | %266.97 |
It is important to note that Waynesboro has 10,877 residents as compared to the local population of 1,748.
Comparing local rates using the bills above to Emmaus Pa.
Here is an example from the Emmaus Water Authority (abbreviated).
| Water Rates | Meter Rates | |
|---|---|---|
| First 40,000 Gallons $2.05 per 1,000 Gallons | 5/8 inch - 3/4 inch Meter $17.00 | |
| First 40,000 Gallons $2.05 per 1,000 Gallons | 1 inch - 1 1/2 inch Meter $39.48 |
| Meter Size | Charge per Quarter | |
|---|---|---|
| 5/8 inch - 3/4 inch | $12.25 | |
| 1 inch | $17.19 | |
| 1.5 inch | $25.00 |
| Per Each 1,000 Gallons | Connection per Quarter |
|---|---|
| $2.31 | $23.75 Per Quarter |
Now let's compare the bills above to the Emmaus water authorites rates.
| Gallons | Local (total) | Emmaus (total) | Difference |
|---|---|---|---|
| 14,000 | $910.86 | $141.46 | %643.9 |
| 19,000 | $910.86 | $163.26 | %557.92 |
| 27,000 | $910.86 | $198.14 | %459.71 |
It is important to note that Emmaus has 11,454 residents as compared to the local population of 1,748.
Comparing local rates using the bills above to Downingtown Pa.
Here is an example from the Downingtown Water Authority (abbreviated).
| Meter Size | Quarterly Charge |
|---|---|
| 5/8 inch | $57.00 |
| 3/4 inch | $171.00 |
| 1 inch | $250.80 |
| 1.5 inch | $524.40 |
| Charge per Quarter |
|---|
| $9.50 per 1,000 Gallons |
Now let's compare the bills above to the Downingtown water authorities rates.
| Gallons | Local (total) | Downingtown (total) | Difference |
|---|---|---|---|
| 14,000 | $910.86 | $383.80 | %237.33 |
| 19,000 | $910.86 | $431.30 | %211.19 |
| 27,000 | $910.86 | $507.30 | %179.55 |
It is important to note that Downingtown has 7,928 residents as compared to the local population of 1,748.
Comparing local rates using the bills above to Pittsburgh Pa.
Here is an example from the Pittsburgh Water Authority (abbreviated).
| Meter Size | Minimum Gallons | Minimum Charge: Water | Minimum Charge: Sewer | Total Minimum Charge |
|---|---|---|---|---|
| 5/8 inch | 1,000 | $23.25 | $7.71 | $30.96 |
| 3/4 inch | 2,000 | $37.83 | $15.62 | $53.45 |
| 1 inch | 5,000 | $76.58 | $37.10 | $113.68 |
| 1.5 inch | 10,000 | $149.47 | $76.62 | $226.09 |
| Account Classification | Water Allocation | Sewer Allocation per 1000 gallons | Total Combined Rate |
|---|---|---|---|
| Residential Property | $9.41 | $6.92 | $16.33 |
| Commercial Property | $8.93 | $6.11 | $15.04 |
Now let's compare the bills above to the Pittsburgh water authorities rates.
| Gallons | Local (total) | Pittsburgh (total) | Difference |
|---|---|---|---|
| 14,000 | $910.86 | $260.65 | %349.46 |
| 19,000 | $910.86 | $342.30 | %266.10 |
| 27,000 | $910.86 | $472.94 | %192.60 |
It is important to note that Pittsburgh has 302,407 residents as compared to the local population of 1,748.
Local water rates are too high.
From the samples above, you can see that all sample water bills would be significantly lower in our sample townships than the local township. The range is from %179.83 to %643.9 depending upon the water consumption in the sample bills. No matter what the consumption, the local water bill is always no less than $910.00. I mentioned this to one water authority employee who said, "Holy Crap! Is that legal?" I responded, "I will find out, but, no. I do not think so."
What does the law say about water rates?
I will use the Pennsylvania law as an example.
To fix, alter, charge and collect rates and other charges in the area served by its facilities at reasonable and uniform rates to be determined exclusively by it for the purpose of providing for the payment of the expenses of the authority, the construction, improvement, repair, maintenance and operation of its facilities and properties and, in the case of an authority created for the purpose of making business improvements or providing administrative services, a charge for such services which is to be based on actual benefits and which may be measured on, among other things, gross sales or gross or net profits, the payment of the principal of and interest on its obligations and to fulfill the terms and provisions of any agreements made with the purchasers or holders of any such obligations, or with a municipality and to determine by itself exclusively the services and improvements required to provide adequate, safe and reasonable service, including extensions thereof, in the areas served.
This is a mouthful! What is important is "To fix, alter, charge and collect rates and other charges in the area served by its facilities at reasonable and uniform rates".
I will try and make some valid arguements to prove my case.
Since the two key terms within the law is reasonable and uniform, lets define them from a legal standpoint.
Reasonable
Reasonable: Agreeable to reason; just; proper. Ordinary or usual
Uniform
Uniform: A statute is general and uniform in its operation when it operates equally upon all persons who are brought within the relations and circumstances provided for.
Since we have defined reasonable, let's look at the reasonable man and the reasonable man standard.
Reasonable Man
Reasonable Man: a term used to describe a person who acts with common sense, with a good mental capacity who is stable.
A phrase frequently used in tort and Criminal Law to denote a hypothetical person in society who exercises average care, skill, and judgment in conduct and who serves as a comparative standard for determining liability. The decision whether an accused is guilty of a given offense might involve the application of an objective test in which the conduct of the accused is compared to that of a reasonable person under similar circumstances. In most cases, persons with greater than average skills, or with special duties to society, are held to a higher standard of care. For example, a physician who aids a person in distress is held to a higher standard of care than is an ordinary person.
I should also illustrate a couple more concepts for completeness.
Unjust enrichment.
The retaining of a benefit (as money) conferred by another when principles of equity and justice call for restitution to the other party.
A benefit by chance, mistake, or another's misfortune for which the one enriched has not paid or worked and morally and ethically should not keep. If the money or property received rightly should have been delivered or belonged to another, then the party enriched must make restitution to the rightful owner. Usually a court will order such restitution if a lawsuit is brought by the party who should have the money or property.
Five elements must be established to prove unjust enrichment:
- 1. An enrichment;
- 2. An impoverishment;
- 3. A connection between the enrichment and the impoverishment;
- 4. Absence of a justification for the enrichment and impoverishment; and
- 5. An absence of a remedy provided by law.
The same thing but simpler.
3 Elements of a Claim for Unjust Enrichment
- 1. The defendant received a benefit;
- 2. At the plaintiff’s expense; and,
- 3. Under circumstances that would make it unjust for the defendant to retain the benefit without commensurate compensation.
Water authorities often charge classes of property owners a higher rate fairly, however, some see multi-family property owners as an increased burden upon their system, which is not always the case, and a wealthy source of revenue to achieve revenue stability. Unfairly targeting a class of property owners is illegal. This is known as unjust enrichment.
Arbitrary and Capricious
While the claim of arbitrary and capricious largely applies to decisions being appealed, a claim that a rate resolution is arbitrary and capricious may be made. This arguement is reserved to agency action restricting the arguement municipal water authorities only and not private water companies.
To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall—
In making the foregoing determinations, the court shall review the whole record or those parts of it cited by a party, and due account shall be taken of the rule of prejudicial error.
- 1 compel agency action unlawfully withheld or unreasonably delayed; and
- 2 hold unlawful and set aside agency action, findings, and conclusions found to be—
- (a) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
- (b) contrary to constitutional right, power, privilege, or immunity;
- (c) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;
- (d) without observance of procedure required by law;
- (e) unsupported by substantial evidence in a case subject to sections 556 and 557 of this title or otherwise reviewed on the record of an agency hearing provided by statute; or
- (f) unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court.
The standard applied would be to determine if, or if not, a reasonable basis was applied by the water authority in rate setting. This may be difficult to prove but possible under the right conditions.
The 14th Amendment of the U.S. Constitution
SECTION 1. All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.
"Property" and Police Power. — States have an inherent "police power" to promote public safety, health, morals, public convenience, and general prosperity, but the extent of the power may vary based on the subject matter over which it is exercised. If a police power regulation goes too far, it will be recognized as a taking of property for which compensation must be paid. Thus, the means employed to effect its exercise may be neither arbitrary nor oppressive but must bear a real and substantial relation to an end that is public, specifically, the public health, safety, or morals, or some other aspect of the general welfare.
Due Process of Law - Justia covers how the 14th amendment applies to public utilities in great detail.
Making a 14th Amendment claim is not an easy one, however, in some cases, it could be appropriate.
How does the law apply?
The three major questions to ask is...
- Is the water rate reasonable?
- Is the water rate uniform?
- Does the water rate accurately reflect the cost of supplying water?
To evaluate this, we must...
- Determine how the rates compare to the rates of other water authorities.
- Determine if the rates are applied uniformly.
- Determine if water rates accurately reflect the cost of supplying water.
How do we do this?
Is the water rate reasonable?
This is a simple process of evaluating the rate resolution and comparing the results to the rate resolutions of other townships. In the study below we evaluate the local water authority rate resolution against 44 other water authority rate resolutions with 5 detailed examples on this page. We find that the local water authority reflects the mean (average) rate for single family properties, however, skews significantly higher or lower for multi-family properties based upon the number of EDUs.
Is the water rate uniform?
The term "uniform" applies both to the how the rate resolution is crafted and the results. As far as the law is concerned, the question is...
- What property classes are defined?
- Do the classes accurately reflect the burden of supplying water to the property class?
- Are all consumers within a class billed uniformly?
- Do any property class structures create de facto classes?
The answer to these questions can be difficult to determine. However, we can make some determinations.
The local water authority establishes just one class, residential properties, however, the rate resolution does bill significantly higher for multi-family properties. And while there is uniformiity in the use of a base charge per EDU, the rate resolution does, in fact, establish a de facto class and divides single-family properties from multi-family properties. From a legal standpoint, the use of EDUs is legal and treating each dwelling unit identically is legal, however, the establishment of two de facto classes is discriminatory and illegal. We will also see that the base rate per EDU unfairly burdens some property owners while not accurately reflecting the cost of supplying water to each multi-family property.
Determine if water rates accurately reflect the cost of supplying water.
Again, the answer to this question can be difficult to determine. However, we can make some determinations.
For this, we must compare a few known factors.
- Is the water consumption of a multi-family property significantly different than a single-family property overall?
- If so, what multi-family properties represent the greater burden upon the water authority and what multi-family properties do not? Where is the divide?
- Is there any physical difference in the connections of multi-family properties to each other and single-family properties?
Without further study, we can make some assumptions.
- Multi-family properties come in two flavors; one, a smaller building on a single lot size similar to a single-family property, and two, larger complexes that are not on standard sized lots.
- There is only one water main size throughout the township.
- Connection sizes for multi-family properties on a standard sized lot are identical to single-family properties.
- Connection sizes for multi-family properties on non-standard lot sizes are likely larger.
- Water consumption for multi-family properties on a standard lot more closely match the high consumption rate of a single-family property.
- Water consumption for multi-family properties on a non-standard lot likey out weigh the high consumption rate of a single-family property by a wide margin.
- Ready to serve requirements for multi-family properties on a standard sized lot is marginal.
- Ready to serve requirements for multi-family properties on a non-standard sized lot may be significant.
- That the rate resolution does correctly bill for the burden of a single-family property.
In our study, we prove that smaller multi-family properties may not or likely does not represent an increased burden in terms of water usage over a single-family property. In fact, knowing that the water main size is consistent and that the connection sizes are identical between smaller multi-family properties and single-family properties, we can assume that any ready to serve costs would only be related to any increase in water usage between the two which is likely marginal if at all. Where the divergance comes in is that larger multi-family properties do represent a difference not only in consumption, but connection size and flow rate. As well, peak demands for smaller multi-family properties are very likely less than a single-family home where members of a family has concentrated usage while multi-family properties are generally more diverse. We also know that for multi-family units, the consumption per unit is lower than single-family properties. So what do we know?
- Usage and burden of single-family properties to smaller multi-family properties upon the water authority is likely comparable.
- Usage and burden of smaller multi-family properties to larger multi-family properties upon the water authority is likely not comparable.
- That fundamental fairness of the local water authority in billing by EDU cannot reflect the cost of water appropriately.
What is legal in rate setting?
- Setting a flat fee for all water usage.
- Setting a minimum base rate per dwelling or EDU.
- Charging a per dwelling or EDU charge.
- Setting a connection charge based upon the connection size and type.
- Setting a charge per block of water usage whether decreasing or increasing and basing the block sizes upon estimates of reasonable usage.
- Charging different or additional seasonal rates during periods of higher usage.
- Establishing property classes and sub-classes and charging different rates by class and sub-class based upon burden upon the system.
- Charging a ready to serve charge based upon a property class.
- To set rates to cover costs of supplying water, current and future maintenance of the water system, and current and future improvements of the water system.
What is NOT legal in rate setting?
- Employ direct subsidies where one customer is charged more to subsidize another.
- Charge and move any funds to the general fund or for anyother purpose.
- Encourage conservation in rate setting.
- To discriminate against any consumer based upon property class.
- To arbitrarily and capriciously set rates. Rate setting must be evidence based and reasonable.
- To set rates unreasonably higher than necessary across property classes to cover costs of supplying water, current and future maintenance of the water system, and current and future improvements of the water system.
- To set unreasonable ununiform rates within a property class.
What am I alledging?
- The water authority has failed to adhere to the literal language of the rate resolution and local ordinances in their billing practices.
- The water authority has by their action created a defacto subsidy may exist whereby multi-family property owners are subsidizing single-family property owners.
- The water authority has by their action created an actual or defacto conservation scheme whereby multi-family are penalized for conservative and reasonbale water usage.
- The water authority has by their action created an income redistribution scheme from multi-family property owners to single-family property owners.
- The water authority has by their action charged additional costs to multi-family property owners by coercing through rate setting the installation of individual meters per EDU and violated the rights of property owners to fair and reasonable rates for master metered accounts.
- The water authority has by their action charged multi-family property owners significantly higher rates sooner than single-family property owners within the same rate class.
- The water authroity has by their action charged multi-family property owners significantly higher rates than other multi-family property owners sooner based upon EDU within the same rate class.
- The water authority has by their action has discriminated against multi-family property owners by charging a significantly higher rate for water usage than single-family property owners within the same rate class.
- The water authority has by their action set rates arbitrarily and capriciously.
- The water authority has by their action set water rates significantly higher for multi-family property owners than is reasonable to recover the cost of providing services including current and future projects.
- The water authority has by their action egaged in regulatory takings by charging multi-family property owners significantly higher rates.
- The water authority has by their action charged a defacto tax.
- The water authority has by their action engaged in unjust enrichment.
- The water authority has by their action charged rates that are unreasonable and ununiform for all residential property owners.
- The water authority has by their action failed to provide equal protection under the law.
Charting our study data.
This first chart compares an example local building with 6 units to the rate resolutions of five other towns. You will notice that the bill rate for water from the local water authority is significantly higher.
You will see that there is a vast difference between the local bill rate than other townships. This is because of the high base rate per EDU being charged.
If you look at the sample rate resolutions, you will find that some are extremely simple to understand and calculate while others not so much. Not one of them uses EDUs (equivelent dwelling unit) in their calculation. To create my study, I simply went to Google and searched "pennsylvania water rates". I chose rate resolutions in the order they appeared that were clear and did not require questions to understand. One exception was Pittsburgh. I wanted a larger city in the mix and not just smaller towns. While my sample size is just five towns, they are fairly representitive non-the-less.
My next question is, How many rate resolutions use EDUs and how EDUs are applied? For example, flat rate versus consumption. This cannot be easily answered with a search. However, I can again search Google using "water rates" and quickly sample a larger number of rate resolutions. Again, I am taking them in the order they appear and if they are clear to understand. One test for this is to quickly calculate a sample water bill and see if it makes sense at all. After checking 39 additional rate resolutions, here is what I found.
- 27 rate resolutions did not use EDUs at all basing bills upon meter size and consumption. Many of these rate resolutions did not charge different rates for water and waste water, while quite a few did.
- 9 rate resolutions did charge a different consumption rate based upon the number of units from a table. Meter rates remained the same.
- 3 rate resolutions did charge a combination of a small flat fee per EDU and a different consumption rate based upon the number of units from a table. Meter rates remained the same.
- No rate resolutions charged a flat fee for metered residential water, either single-family or multi-family or anyother class of consumer.
The local water authority charges a flat per EDU for 5000 gallons and a rather high fee per 1000 gallons over the 5000 gallons alloted. Single-family homes are a charged $151.81 base rate and $12.41 per 1000 gallons over the base rate. Multi-family properties are charged the base rate per EDU and $12.41 per additional 1000 gallons over the allowable quantity. While checking how many rate resolutions charge an EDU charge, I quickly calculated some sample water bills and found that they all were much less than what landlords are paying locally. Of all the rate resolutions, many rates per 1000 gallons of water in the 5 dollar range or less including wastewater. In no case did a rate resolution allocate 5000 gallons, however, some rate tables did have 1000, 2000, 5000, etc. rate schedules.
According to Study: Efficient Fixtures Cut U.S. Indoor Water Use - By Brett Walton, Circle of Blue, the average household used 138 gallons of water per day in 2016. This would be 4197.5 gallons per month. You can read the report Residential End Uses of Water, Version 2. Tulsa City seems to confirm this stating that the average person uses 3000 galons of water per month. However, Portland sates that the average person uses 50 gallons per day, nearly half what Tulsa claims and much less than Circle of Blue claims. According to How Much Water Homes Use - Eye On Housing, the daily average ranges from 100 to 472 depending upon where you live. According to this page, Pennsylvania housholds use an average of 135 gallons per day which is very close to what Circle of Blue states.
Taking the sample rate resolutions above, 4197.5 gallons per month, and a connection of 1 inch, how does the local water authority water rates stack-up against the others? Lets start with the local rate resolution.
- Local: $251.09
- Altoona: $300.87
- Waynesboro: $185.23
- Emmaus: $137.1
- Downingtown: $374.30
- Pittsburgh: $278.92
Taking the sample rate resolutions above, the Portland average of 50 gallons per day in the way of 5000 gallons per quarter, and a connection of 1 inch, how does the local water authority water rates stack-up against the others? Lets start with the local rate resolution.
- Local: $151.81
- Altoona: $163.59
- Waynesboro: $85.4
- Emmaus: $102.22
- Downingtown: $298.3
- Pittsburgh: $195.33
Compare Price of Single-Family Home Using 50 Gallons versus 138 Gallons per Day
You will notice that the bill rate for local single-family properties is reasonable compared to our five sample towns. You will also notice that between 50 gallon and 138 gallon water usage per day, the local water authority does appear to be billing reasonably between the two.
6 Unit Local Building Billing Rate Compared to Other Townships
This chart is similar to our first chart using 138 gallons per day for a single person. You will see that there is a vast difference between the local bill rate than other townships. This is because of the high base rate per EDU being charged.
Local Billing Rate by EDU
This chart shows that conservation is penalized. If the rate resolution is designed to encourage conservation, the clear implication is that the rate resolution actually encourages more use. The price for a given volume of water can increase radically based upon the number of EDUs. Given that most all local apartments are being served from the same main and conncetion size as single-family property, any ready-to-serve requirement would be "at the head" where water is produced. The burden for this cost is not shared evenly between single-family and multi-family properties where multi-family properties are paying anywhere from 2 times and 3 times more in our example.
You will notice that when billed the high base rate per EDU, landlords pay a significantly higher price for water at an ununiform rate as the number of units increases. In this example, the price difference for 14000 gallons of water for a 6 unit building can be more than 3 times what a single-family home pays and nearly twice what a 3 unit building pays. You will also notice that the increase in rates paid per EDU is far steeper for properties that use less water than it is for properties that use more water.
Billing Skew Rate (Based Upon the Chart Above)
The skew rates of single-family home through to a 6 unit multi-family building using 14,000, 19,000, and 27,000 gallons further supports that billing a larger base rate per EDU by the local water authority is unreasonable. While the previous chart shows the climb of billing rates, this chart shows the skew of that climb. The lower the number, the less skew there is. A number of 0 means there is no skew. I expect a skew, however, the skew rates of 0.331479902902967 and 0.442498439884344 are astronomical. The variation between the skew rates also shows that water rates are not being applied evenly. These metrics speak to fairness in the billing practice.
Price per Gallon by EDU
This chart supports the claims of the previous chart. You will notice that the price of water per gallon increases per EDU at the lower usage ranges and nearly 3 times at the higher ranges. This means that landlords with conservative tenants will face a steeper price scale than landlords without conservative tenants. This is because the high base rate required per EDU is punitive and does not reflect actual usage.
Per Gallon Skew Rate (Based Upon the Chart Above)
The skew rates of the price per gallon for single-family home through to a 6 unit multi-family building using 14,000, 19,000, and 27,000 gallons further support that billing a larger base rate per EDU by the local water authority is unreasonable. While the previous chart shows the climb of the price per gallon, this chart shows the skew of that climb. The lower the number, the less skew there is. A number of 0 means there is no skew. I expect a skew, however, the skew rates of 0.362363851999529 and 0.487238719973554 are astronomical. The variation between the skew rates also shows that water rates are not being applied correctly. These metrics speak to fairness in the billing practice.
Local Building Average Daily Usage Compared to National Average per of 138 Per Household
You will notice that the sample water bill usages are, 14000 = %25.57, 19000 = %34.7, 27000 = %49.31 per unit as compared to the 138 gallon national daily usage. This indicates that this buildings renters use significantly less water than average.
Percentage of Local Renters Compared to State
Local Household Income (abbreviated)
Notice the heavy concentration in the $10000 to $20000 range. The $20000 to $40000 are likely moreover working couples with or without children.
Number of Local People by Rents Paid Each Month (abbreviated)
Notice the high concentration of rent payers within the $300 to $400 range. The higher ranges, $500+, are often subsidized rents, seniors on social security, or families with two incomes with or without children.
Price for Water per Tenant Based Upon EDU
This chart shows that charging a higher base rate per EDU, regardless of the number of EDUS, is not reasonable. You will notice the share of the water bill per EDU reduces based upon the number of EDUs. And while this may seem like a good thing, the burden is clearly higher for properties will less units. This speaks to fairness.
Percentage of Rent ($400) Paid for Water per Tenant Based Upon EDU
This chart is similar to the previous chart except that it reflects the portion of rent required to pay for water. This chart shows the percentage of the cost of water for a tenant paying $400 rent. Not all tenants pay the same rate based upon the number of EDUs. Again, the high base rate per EDU is not reasonable.
Difference Compared to Single-Family Five and Ten Year Climb
The Difference Compared to Single-Family Five and Ten Year Climb charts are similar to the Local Billing Rate by EDU chart except that it shows the difference a landlord pays compared over five years and ten years. The Burden Compared to Single-Family Five Climb chart assumes a rent of $475.00 over five years and clearly shows the burden is not shared equally. This reflects the unreasonable burden upon the landlord over time based soley upon the righer base rate and the number of EDUs. It also clearly shows that any ready-to-serve requirement is grossly exagerated in the rate resolution. The local rate resolution cannot be legally justified when looking at these numbers.
What have we learned?
In short, that the higher base rate per EDU causes rates to be unreasonable which violates Pennsylvania Law requiring "To fix, alter, charge and collect rates and other charges in the area served by its facilities at reasonable and uniform rates...". The water rate scheme heavily skews water rates based upon the number of EDUs. The water rate scheme cannot be altered as is to comply with the law. The water rate scheme was flawed from the beginning.
I will break this down in detail.
- Local landlords are paying a heavy premium for water.
- Local landlords water bills rise steeply based upon number of EDUs.
- Local landlords are paying a heavy premium for water compared to 5 other townships.
- Local renter income falls well below the State average by 1/3rd. The heaviest concentration is between $10,000 to $20,000.
- Local rents paid is low with the heaviest concentration between $200 and $400.
- Local tenants pay different water rates based upon how many units a multi-family property has.
- Of all the local property classes, only multi-family properties are charged more for consumption.
- Where price signaling is meant to encourage conservation, multi-family property owners who are meeting conservation goals, are still being penalized.
- Connection sizes restrict the burden of a multi-family property to 1.56 nominally or a maximun of 2.27 times the flow rate.
- According to AWWA (American Water Works Association), the national rate of investment by a water authority is 1.4 times from a .75 inch to a 1 inch connection.
- Apartment dwellers use much less water per household than a single-family home.
- Single-family (local) home billing is proportional to usage.
- Multi-family (local) property billing becomes far less proportional by EDU with proportionality disappearing altogether with as few as 5 or 6 units.
- Single-family peak usage patterns are concentrated while multi-family property usage patterns are more diverse.
- The investment recovery, ready to serve, and peak demand costs are likely no more than 1.4 to 1.56 times a single family home.
- Multi-family billing rates by the local water authority are not likely reasonably related to the costs of providing water services.
- Multi-family billing rates by the local water authority are not likely to encourage conservation.
- The cost per gallon of water charged multi-family property owners increases more sharply than usage and the need for demand and discourages conservation.
- The rate resolution is incomplete and unclear.
- The rate resolution does not mention charging a base rate per EDU.
- Of the 5 sample township rate resolutions, only the local water authority charges multi-family properties more than a single-family home.
- Of the 39 rate resolutions sampled, 27 do not charge multi-family properties more than a single-family home.
- Of all of the sample rate resolutions, the 5 included and the 39 additional, 32 do not charge multi-family properties more than a single-family home.
- Of all of the sample rate resolutions, the 5 included and the 39 additional, 13 charge multi-family properties more than a single-family home.
- Of the 13 rate resolutions that do charge more multi-family properties more than a single-family home, only 1 charges a significant rate for multi-family water usage.
- Out of the 44 rate resolutions sampled, not including the local rate resolution, 0 charged a base rate per EDU.
- Out of the 44 rate resolutions sampled, not including the local rate resolution, 3 charged a very small flat EDU charge.
- Out of the 44 rate resolutions sampled, not including the local rate resolution, 9 charged a slightly different consumption rate based upon EDUs.
- It is very likely that the local rate resolution was never tested for the effects upon consumers.
- It is very likely that the higher prices charged by the local water authoriy is negatively effecting lower income persons.
- It is unlikely that a rate study has occured within a decade or more to meet current standards.
- It is unlikely that a rate audit has occured within a decade or more to meet current standards.
- It is unlikely that expert consultants or expert attorneys within a decade or more have been consulted regarding the rate resolution.
Using the Reasonable Man Standard
Using the reasonable man standard, What would the reasonable man think?
- For multi-family properties, tenants are generally single, young, elderly, and occupied by just one person.
- For master-metered multi-family properties, water prices billed to local landlords are unreasonable more times than not.
- For master-metered multi-family properties, water prices billed to local landlords are not uniform.
- For master-metered multi-family properties, the cost of water to the tenant is not uniform.
- Local income and rents paid are far lower than the state average.
- State occupancy laws restrict how many persons can live within a unit restricting multi-family dwellings moreso than single-family dwellings.
- It is not likely that anyother town charges a significant base rate for multi-family water consumption.
- Only one local property class is charged more for water consumption.
- Multi-family proerties overall do not use more water per unit than a single-family home.
- Multi-family properties based upon connection size, cannot not represent more than 1.4 to 1.56 demand for water at any time.
- The AWWA average water authority investment rate for the likely multi-family connection size is likely reasonable.
- For master-metered multi-family properties, the cost of water far exceeds the AWWA average water authority investment rate calculation.
- Smaller multi-family properties with few (2-10 units) often do not represent more peak usage than a single-family home.
- The investment recovery, ready to serve, and peak demand costs likely cannot justify local multi-family water pricing.
- The local rate resolution, as it exists, discourages conservation.
- Where primary water conservation efforts lie with the tenant, the tenant cannot be influenced by water rates in a master-metered property.
- The local rate resolution is indeed unusual and unexpected when sampled against 44 random other rate resolutions.
- The rate resolution is incomplete and unclear.
- The rate resolution does not mention charging a base rate per EDU.
- The local water authority base rate for multi-family usage and consumption charges are increasingly excessive by EDU.
- The local water authority base rate for multi-family usage and consumption charges are increasingly punitive by EDU.
- It is likely that the local water authority has not considered the effect of their water rates on consumers.
- Lower income peoples are often paying the price for the local water authorities overcharging.
- It may be that the rate resolution is structured based upon discredited conservation billing methods popular in the past.
- Multi-family property owners who conserve water are still punished through water rates.
- It is unlikely that the local water authority has not sought expert consultation in a very long time.
- It is likely that the local water authority employees have not been properly trained, are not aware of rate setting requirements and complexities, and the law.
- The local water authority must change their rate resolution.
- The local water authority owes landlords refunds for all water overcharges since implementing the base rate per EDU charge found in the rate resolution.
Using a legal point of view.
Using a legal point of view, What possible legal violations exist?
I am no Elle Woods (lawyer), but I will give my best SWAG at this.
- The local water authority use of standardized EDUs in their rate resolution, all residential properties are one class.
- The rate resolution is incomplete and unclear.
- The rate resolution does not mention charging a base rate per EDU.
- The literal language of the rate resolution does not allow the water authority to bill a base rate per EDU.
- The local ordinances, rules, and regulations do not clarify the rate resolution.
- The local ordinances, rules, and regulations does not allow the water authority to bill a base rate per EDU.
- Water rates are not "uniform" within the same property class.
- Water rates are not "uniform" across commonly recognized property classes.
- Water rates favor single-family homes and discriminatory to multi-family property owners.
- Water rates applied to differing sized multi-family properties by EDU is "discriminatory".
- Water rates resolutions that are punitive to encourage conservation is unconstitutional. (FMRR Development v. Birdsboro Municipal Authority)
- Multi-family property owners who meet conservation goals of the water authority are still punished with higher water rates.
- Water usage and consumption rates for multi-family beyond 2 units may be considered a defacto "tax" by the water authority not authorized by law.
- Water usage and consumption rates for multi-family beyond 2 units may be a "regulatory taking" protected under the 14th Amendment of the U.S. Constitution.
- The local water authority may not have exercised "due diligence" in their rate setting duties and therefore liable.
- Local multi-family property owners may not be enjoying "equal protection" under the law.
Arguements. (Again, I am not a lawyer.)
- Use of EDUs to include single-family and multi-family units are not equal based upon local and national water and sewer usage data and occupancy laws.
- Use of EDUs to include single-family and multi-family units is unequal and charges multi-family units higher rates sooner than single-family units. (FMRR Development vs. Birdsboro Municipal Authority)
- Use of EDUs to include single-family and multi-family units is unequal and therefore discriminatory by charging multi-family units with more units higher rates sooner than multi-family units with fewer units.
- Use of EDUs to include multi-family units is unequal and therefore discriminatory to tenants of multi-family properties with fewer units.
- Use of EDUs to include multi-family units is discriminatory to one class of property.
- Use of EDUs to include multi-family units is discriminatory to one class of business.
- The billing rates charged master-metered multi-family properties has forced these property owners to pay for install individual meters against their property rights.
- While the use of a flat fee per dwelling unit is legal, the larger flat base rate calculation is unreasonable and discriminatory toward multi-family property owners.
- While the use of classes is legal, the water authority has one class for all residential properties.
- While the use of a minimum water usage rate is legal, the water authority must not require such a minimum rate per EDU as to consistently charge rates to consumers of a class higher than required and disproportionally.
- While use of classifications and EDUs are legal, the legal question of reasonableness is no longer tied to the original intent of the tier structure in the rate schedule, but rather the effect of the rate schedule upon consumers which may or may not have changed over time.
- Incentivizing conservation by the water authority through water rates may still penalize multi-family property owners who meet the water authorities goals.
- Redistribution schemes using water rates from one property owner to another property owner as a de facto or de jure subsidy is unconstitutional.
- Use of a larger flat base rate per EDU is arbitrary and capricious.
- The water authority is disregarding the literal language of its own rate resolution by charging the base rate times the number of units. This rate resolution provided to the customer has no stipulation.
- The procedure to legally challenge water billing results in no action leaving no rational remedy for a property owner.
- The water authority has engaged in unjust enrichement.
Use of EDUs to include single-family and multi-family units are not equal based upon local and national water and sewer usage data and occupancy laws.
We know that multi-family dwellers use far less water overall than single-family home. Water authorities argue that while some multi-family dwellers use more water and some use less, that in the aggregate, each unit is roughly equivelent in usage. One concept comes from the notion that each person residing within a locale has roughly the same requirements upon the system regardless of where that burden lies. For example, if the person uses a laundromat, goes to school, works, socializes, etc.
The arguements by the water authority are flawed arguements.
And while there is a basis for the assumption that an individual still represents a burden upon the water system in different places as they live their lives may be true, the burden upon the water system at a laundromat, school, work, restaurant, etc. does not belong to the landlord and placing that burden upon the landlord is to single out one class of bussiness or consumer for revenue recovery that the water authority is actually getting paid twice for. For example, a tenant that uses a laundromat because laundry services do not exist at home, the tenant is charge for water twice, at the laundromat and within the EDU (equivalent dwelling unit). It is not reasonable to realocate burdens that may or may not exist elsewhere upon the multi-family property owner.
Occupancy laws restrict how many people can live within a dwelling. For example, a one bedroom apartment within Pennsylvania is limited to 2 persons and may be restricted to just 1. A two bedroom apartment is limited to 4 or just 3. This restriction is based upon square feet and not the number of bedrooms. Single-family homes often have more than one bedroom and only are restricted by occupancy as a rental. The local concentration of bedrooms for apartments is 1 or 2 bedrooms while rental houses is 4. For non-rental houses, the concentration is 5.
Apartment dwellers are largely younger single individuals, older adults also often single, and lower income individuals who are on social security or other subsidy. These people by-and-large use far less water than a family in a single-family home.
To say that each dwelling unit is roughly equivelent is fiction.
Use of EDUs to include single-family and multi-family units is unequal and charges multi-family units higher rates sooner than single-family units.
The use of an EDU charge, small or large, often charges multi-family property owners more money for water quicker than single-family property owners. While the use of EDUs is legal and may be justifiable in some cases, FMRR Development vs. Birdsboro Municipal Authority makes clear that EDU charges for a single class of properties, in this case residential, is discriminitory, illegal within the state of Pennsylvania, unconstitutional according to the Pennsylvania Constitution, and by extension, unconstitutional according to the 14th Amendment of the U.S. Constitution.
Use of EDUs to include single-family and multi-family units is unequal and therefore discriminatory by charging multi-family units with more units higher rates sooner than multi-family units with fewer units.
Local ware rates, when calculated based upon how many units exist within a single property, for example, single-family versus apartment buildings with 2-6+ units, is unequal. The larger base water rates skews pricing wildly and does not reflect the actual burden upon the water system. This is not a close call. The numbers vary wildly. This is discriminitory, illegal within the state of Pennsylvania, unconstitutional according to the Pennsylvania Constitution, and by extension, unconstitutional according to the 14th Amendment of the U.S. Constitution.
Use of EDUs to include master-metered multi-family units is unequal and therefore discriminatory to tenants of multi-family properties with fewer units.
Local water prices are passed onto tenants who dwell in master-metered multi-family properties. The rate at which a local tenant pays for water varies wildly.
Use of EDUs to include multi-family units is discriminatory to one class of property.
Local water rates charged to multi-family master-meter properties varies by how many units exist and unequal. While the rate resolution appears to be a linear calcualtion based upon EDUs, in practice, the larger base water rates skews pricing wildly and does not reflect the actual burden upon the water system.
Use of EDUs to include multi-family units is discriminatory to one class of business.
Local milti-family properties are charged more for water than any other class of busines and therefore unequal. For example, laundromats, restaurants, bars, clubs, etc. dispite the burden each business places upon the water system.
The billing rates charged master-metered multi-family properties has forced these property owners to pay for install individual meters against their property rights.
Multi-family property owners have the right to be billed an appropriate price for water. Because of the larger base rate per EDU, some landlords have paid the water authority to install individual meters and require tenants to establish water service on their own. At about $2000 per connection and meter, this is an expense that the landlord has paid unduly to defend against the illegal and economic reality they faced. Multi-family property owners have the right to their property and to have a single meter. Forcing through economical means the landlord to install meters is an undue burden. For example, a 6 unit apartment building woudl have to pay $12,000 dollars to escape the illegal and undue burden a multi-family property owner faced in water pricing. This is a boom for the water authority. It allowed the water authority to make more money considering that the rate resolution does not, in reality, charge equal rates for water service.
While the use of a flat fee per dwelling unit is legal, the larger flat base rate calculation is unreasonable and discriminatory toward multi-family property owners.
The use of a larger flat base rate charged by the local water authority skews water pricing wildly. This rate scheme has existed for a long time. As water rates increased over the years, the effect of the rate scheme has been to skew water prices to a greater degree. And while a flat base rate is allowed by law, the method of calcualtion established by the local water authority is not.
While the use of classes is legal, the water authority has one class for all residential properties.
The local water authority has one class for all residential properties. This is evident in the use of EDU for single-family properties and per dwelling in a multi-family property. And while the use of EDUs appear to create two property classes, single-family, businesses and other facilities, and multi-family, the rate resolution makes no distinction between single-family and multi-family by use of the base rate per EDU. While the law does allow for establishing property classes, the local water authority has chosen not to establish property classes in regard to residential properties.
While the use of a minimum water usage rate is legal, the water authority must not require such a minimum rate per EDU as to consistently charge rates to consumers of a class higher than required and disproportionally.
The local water authority uses a base rate per EDU. And while the base rate may appear to be reasonable for the water authorites purposes, the reality is that the larger base rate skews water prices per EDU wildly.
While use of classifications and EDUs are legal, the legal question of reasonableness is no longer tied to the original intent of the tier structure in the rate schedule, but rather the effect of the rate schedule upon consumers which may or may not have changed over time.
Original arguements against the use of EDUs in water billings centered around if the rationale behind the concept of EDUs was unreasonable. Prior court decisions disagreed. This concept of EDUs representing an individual or household relatively equal without regard to the effect of such a scheme is seriously flawed. Water authorities argue that EDU calcualtions are resonable because they represent individuals, however, we have already proven that not all persons are equal nor is each household. In FMRR Development vs. Birdsboro Municipal Authority, the court found that use of EDUs being unequal is not only illegal according to Pennsylvania law, but unconstitutional as well.
Water authorities are allowed to define EDUs as being representitive to all properties within a single class and therefore represents households overall and therefore reasonable. However, the Pennsylvania requires "To fix, alter, charge and collect rates and other charges in the area served by its facilities at reasonable and uniform rates...". While water authorites are required to do rate studies, these studies only take into account rates from the perspective of the water authority and not the actual effects of the rates upon the consumer. Some water authorites do study the effect upon consumers. This does not have to be an expensive process and likely can be done with existing data the water authority has with reasonable precision. Failing to study the effects upon the consumer is to one, make an assumption that the water authories calculations are correct, two, to abdicate responsibilities under the law, and three, assume liability under the law.
Courts recignize that cause and effect are important. Any arguement made by a property owner must fully illustrate that water rates using EDUs are unequal or unreasonable.
Incentivizing conservation by the water authority through water rates may still penalize multi-family property owners who meet the water authorities goals.
Where a water authority incentivizes conservation through higher water rates in the top tiers, multi-family property owners who meet conservation goals may still be punished through higher water prices. Encouraging conservation rate schemes often do not account for property owners who not only meet conservation goals, but also may not be able to escape the punitive rate tiers due to the nature of the property itself.
Redistribution schemes using water rates from one property owner to another property owner as a de facto or de jure subsidy is unconstitutional.
Any water rate resolution that creates a de facto or de jure subsidy, intended or not, is illegal and unconstitutional. Some states such as California and Pennsylvania require that water rates accurately reflect the cost of supplying water to any consumer. For these states, inaccurate rate resolutions are illegal and violate the State Constitution. Intentional rate setting to enrich one and impoverish another, even if the enrichment is not the water authority but another user of the water system, is unjust enrichment and a form of income redistribution which are both unconstitutional.
Use of a larger flat base rate per EDU is arbitrary and capricious.
The use of a larger flat base rate is an outlier and very unusual. And while the law allows for the use of flat base rates per EDU and while an arguement can be made to justify such a rate scheme, the effect is that larger flat base rates skew water prices wildly and is unequal. Because of the unusual nature of the rate scheme and that standards within the industry does not include a larger flat base rate, it is reasonable to conclude that the use of a larger flat base rate is arbitrary and capricious.
The water authority is disregarding the literal language of its own rate resolution by charging the base rate times the number of units. This rate resolution provided to the customer has no stipulation.
The local rate resolution is incomplete and unclear. It makes no mention that multi-family properties are charged the flat base rate per dwelling unit. The reasonable man standard applied to the local rate resolution would assume that the minimum bill would be 151.81 plus additional charges for water consumption. The local water authority is ignoring the literal language of their own rate resolution. Water authorities are required to create a fair and accurate rate resolution and make this resolution available to the consumer. Failure to do so is to unduely and illegally disadvantage the consumer. Because the local rate resolution is incomplete as provided to the customer, the local water authority has not only violated the law, but is liable to the rate resolution as it is written. Any multi-family property owner who intends to challenge billing, as one more aguement availble to them for overbilling.
The procedure to legally challenge water billing results in no action leaving no rational remedy for a property owner.
Anyone who has inquired about their high water bill or tried to challanged their water bill in any way knows that such inquiries and challenges are often ignored, given arguements that the rates are reasonable and legal, or even given excuses such as leaking water pipes and even flushing cats. While the law does provide remedies to the consumer, the reality is that these remedies are, far more often than not, ineffective if at all. The only realistic recourse left to a property owner is to file a very costly law suit which represents an undue burden upon the property owner. Public Utility Commissions often do not regulate municiple water authorities which represent an overwhelming number of water authorities, 83% (according to Rahill‐Marier, B. and U. Lall. 2013. America's Water: An Exploratory Analysis of Municipal Water Survey Data. Columbia Press). For most water consumers, the prohibitive cost of a lawsuit means that there is actually no recourse even where the law provides one. The remedies allowed under the law, in reality, advantages the water authority, frustrates consumers, and the effect is that consumers give up or see no resolution allowed to them. People spend years on average fighting local water authorities over legitimate complaints to no avail.
The water authority has engaged in unjust enrichement.
Because the local rate resolution is unequal, unreasonable, forced landlords to install additional and expensive water connections and meters, and has ingored the literal language of their own rate resolution, the water authority has illegally enriched itself creating an impoverishment of property owners without justification and the only realistic remedy to the property owner is to sue the water authority.
So how did the local water authorities rate resolution get this way?
While I cannot know for sure, I would venture to guess that the rate scheme was designed a very, very long time ago when the water and wastewater rates were much, much, much lower. As the water authority raised the water and wastewater rates over the years, what was a palatable rate resolution was heavily weighted and skewed. This is why I believe that a rate study or rate audit has not been completed in decades. The responsibility to set reasonable and uniform rates remains, however. There is no excuse for what has happened even if it appears to be understandable and no matter how much you like the individuals who work for the water authority as I do. Not doing your due diligence over the years, and indeed likely decades, is no excuse. I am not giving a pass to the engineers who completed the last rate study. While the rate scheme was likely legal, it was a poor design and indeed an outlier, that could not be adjusted over time by a staff that is not fully aware of the ins and outs of water rate setting and remain legal. As mentioned earlier, smaller water authorities often do not have trained staff. It is likely that decades of ignorance exacerbated the problem increasingly over the years.
A landmark lawsuit.
FMRR Development vs. Birdsboro Municipal Authority
Owners rejoin that the Authority has intentionally disregarded the literal language of its own Rate Resolution by employing a billing practice that charges owners of multi-family residential dwellings a premium consumption charge based upon the specific assignment of a single EDU for each multi-unit apartment complex while basing all other charges on the number of dwelling units present. Owners maintain that such practice effectively requires residential apartment owners and tenants to pay a higher rate for water than owners of single-family residential dwellings and, therefore, unlawfully discriminates against such owners in violation of its own Rate Resolution and the legal requirement of uniformity within a classification.
This statement is very confusing to me. However, the decision is very clear.
Because, as currently applied, the Rate Resolution makes residential apartment owners pay a higher water rate than single-family residential dwellings, the Authority has unlawfully discriminated against such owners in violation of the MAA’s legal requirement of uniformity within a classification. Accordingly, we hold that the Authority’s water and sewer consumption charge calculation methods are contrary to the MAA’s mandate to charge reasonable and uniform rates because it is unlawfully discriminatory as applied to multi-dwelling properties.
Here is the crux of the issue.
In the instant case, each Owner’s property has only one meter. The Authority charges them a ready-to-serve charge and an EDU charge per unit, and an excess consumption charge per meter, notwithstanding the number of units. The Rate Resolution expressly requires the excess charge "per meter." R.R. at 9. The rates apply to domestic establishments; however, domestic establishments are not classified as single-dwelling or multi-dwelling. Consequently, the multi-dwelling properties are charged an excess rate much sooner than the single-dwelling properties, resulting in multi-dwelling properties being charged a much higher rate overall than single-family dwellings.
The points are as follows:
- The rate resolution does not make a distinction in the rate resolution between single-family and multi-family properties.
- Excess usage charges are charged multi-family properties sooner than single-family properties.
The facts of the case.
- Owner has two properties with 20 apartments each. Each property has just one meter.
- The rate resolution charges a fee of $3.50 per EDU per 1000 gallons of water.
- The rate resolution employs both an EDU billing method and a consumption method of billing not based upon EDU.
- Dispite the apparent class structure of domestic, commercial, industrial, and public property classes, all residential properties fall within the domestic property class without sub-classes being defined.
- Not all residential properties within the domestic property class are treated uniformly and are billed differently based upon whether the property is a single-family home or a multi-family property.
- The encouragement of conservation in the water authorities billing practices effects the landlord and not the tenant because the tenant is the end-user and not directly effected by the billing practice, the billing practice goal cannot be realized.
- The definition of EDU within the rate resolution does not match the calculation method.
The decision.
- The fact that properties within the domestic class have been billed at a different rate, the court rulled the practice illegal and ordered the refund of overpayments in the amounts of $17,033.40 and $23,430.99.
- The court ordered the interest rate of 6% per annum of each refund to be paid from the date of September 2014.
- The court ordered that individual meters or other technology be installed at the water authorities expense per unit per property.
How is this case similar and different to the local water authorites billing practices?
- All residential properties, single-family and multi-family, exist wihin a single class without sub-classes.
- Not all properties within a single class are treated uniformly and are billed differently based upon whether the property is a single-family home or a multi-family property.
- The local water authority also charges a per EDU charge in the form of a base rate.
- The local water authority also charges consumption charges not based upon EDU.
- The local water authorities base rate of 151.81 is high and far more significant that the $3.50 EDU charge per 1000 gallons found illegal in the above case.
- While the definition of EDU is incorrect or at least confusing for the Birdsboro rate resolution, the local rate resolution does not contain language regarding EDUs at all.
- The local water authority rate resolution provided to the customer is incomplete.
- Any landlord would not be able to calculate a bill based upon the rate resolution as it is written.
What can this decision mean for the local water authority?
- Lawsuits are likely to be filed.
- For each suit, the water authority will likely owe significant refunds.
- If the water authority challenges the lawsuits, the water authority will likely owe interest payments.
- The water authority may need to install, at their own expense, water meters per EDU for multi-family property owners who sue.
- The local water authority may have to pay attorneys fees.
- An audit of the water authorities billing and billing practices is likely.
- The water authority may need to pay for a new rate study.
- Water authorities may need to read meters and provde a bill within 1-3 days to the landlord when a tenant moves out where a tenant has an account.
- Water authorities may need to adopt a vacancy policy where a landlord reports that a unit has been vacated.
What can this decision mean for local landlords?
- If the local landlord files a lawsuit, the landlord may be due a refund.
- If the local landlord files a lawsuit, the water authority may be required to install individual water meters per unit.
- The water authority may require individual meters per unit for all multi-family properties.
- The water authority may require individual water meters at the landlords expense if the landlord does not file a lawsuit.
- If individual water meters are installed, the landlord may have to adjust their rental rates and practices.
- If individual water meters are installed, to prevent disconnection to the paying tenants, the water authority may need to install individual connections. See City of Columbus, et al. v. Hazel Golden.
- If individual water meters are installed, the landlord will be responsible for unpaid tenant water bills.
- Landlords will need to request a meter reading and a bill to be drawn up very quickly when a tenant moves out.
- The billing rate will likely change and tier rates may become somewhat punitive for higher water use.
- The billing rate of water likely will be raised to retain current revenues and recover losses from lawsuits, audits, and studies.
What can this decision mean for tenants?
- It is more likely that tenants will need to establish water service going forward.
- Leases will likely change to include landlord protections for unpaid water bills.
- Rental deposits are likely not to be paid immediately or quickly when a tenant moves out unless the water bill is paid in full and verifiable.
What else is changing?
- Landlords are filing legal challenges against water authorities that hold the landlord liable for unpaid tenant bills. This is likely to succeed.
- Water authorities are likely to begin credit checks of new water customers and may require deposits in some cases.
- Water authorities may no longer be able to file a lien against a landlord owned property for an unpaid tenant bill.
- Water authorities may no longer be able to tranfer unpaid tenant water bill debt to the tax authority.
- Water authorities may no longer be able to terminate water service to a landlord owned property for a tenant unpaid water bill.
Birdsboro Borough Rate Resolution
We will look at the rate resolution of 2008, ironically, the Birdsboro rate resolution has not changed since the court decision in 2015. I am, understandably, confused by this. If the rate resolution is determined to be unconstitutional in 2015, why has it not changed? Part of the answer is simple. The water authority has continued to file appeals. The final order was signed in January 2019. This case is complete. Still, I would have expected the rate resolution to have changed by now. The water authority had 4 years to prepare a new rate resolution. This rate resolution has been determined to be illegal under Pennsylvania law, the Pennsylvania Constitution, and the U.S. Constitution.
EQUIVALENT DWELLING UNIT: One (1) EDU or Equivalent Dwelling Unit shall be defined as: One Hundred Fifty-Five (155) gallons per day
Average Quarterly Usage is defined as: Fifteen Thousand (15,000) gallons per quarter
| Borough of Birdsboro Ready-to-Serve | Outside the Borough Ready-to-Serve |
|---|---|
| $15.68 | $23.00 |
| Domestic Establishment | Commercial Establishment | Industrial Establishment | Public Establishment | |
|---|---|---|---|---|
| Inside Borough per EDU | $3.50 | $5.431 | $8.518 | $8.518 |
| Domestic Establishment | Commercial Establishment | Industrial Establishment | Public Establishment | |
|---|---|---|---|---|
| Outside Borough per EDU | $5.15 | $7.0044 | $10.3428 | $10.3428 |
| Borough of Birdsboro | Per Consumer Unit |
|---|---|
| All water consumption up to Quarterly Average | $4.992 per 1,000 gallons |
| From Quarterly Average to 2x Quarterly Average | $7.462 per 1,000 gallons |
| From 2x to 3x Quarterly Average | $7.54 per 1,000 gallons |
| From 3x and up | $7.553 per 1,000 gallons or any portion thereof |
| Outside the Borough | Per Consumer Unit |
|---|---|
| All water consumption up to Quarterly Average | $7.371 per 1,000 gallons |
| From Quarterly Average to 2x Quarterly Average | $10.985 per 1,000 gallons |
| From 2x to 3x Quarterly Average | $11.83 per 1,000 gallons |
| From 3x and up | $11.843 per 1,000 gallons or any portion thereof |
| Borough of Birdsboro Ready-to-Serve |
|---|
| $21.62 |
| Domestic Establishment | Commercial Establishment | Industrial Establishment | Public Establishment | |
|---|---|---|---|---|
| Inside Borough per EDU | $6.8822 | $7.579 | $9.9372 | $9.9372 |
| Borough of Birdsboro | Per Consumer Unit |
|---|---|
| All water consumption up to Quarterly Average | $7.215 per 1,000 gallons |
| From Quarterly Average to 2x Quarterly Average | $9.23 per 1,000 gallons |
| From 2x to 3x Quarterly Average | $9.269 per 1,000 gallons |
| From 3x and up | $9.282 per 1,000 gallons or any portion thereof |
| Outside the Borough | Per Consumer Unit |
|---|---|
| All water consumption up to Quarterly Average | $7.371 per 1,000 gallons |
| From Quarterly Average to 2x Quarterly Average | $10.985 per 1,000 gallons |
| From 2x to 3x Quarterly Average | $11.83 per 1,000 gallons |
| From 3x and up | $11.843 per 1,000 gallons or any portion thereof |
This rate resolution is poorly written. For example, they define EDU as 15000 gallons of water, however, the rate tables indicate that the meaning of EDU is actually a dwelling unit. The use of "per consumer unit" is not clear. I assume this is a meter and not a dwelling. The water authority should use the term "meter" or "connection" to be clear. Lastly, if you have 2 apartments, does this mean you pay $4.992 up to 30,000 gallons or 15,000 gallons? I assumed 15000 gallons in my calculations.
Let's compare the sample bills above to this rate resolution. I am assuming "in borough".
| Gallons | Local (total) | Birdsboro (total) | Difference |
|---|---|---|---|
| 14,000 | $910.86 | $325.54 | %279.8 |
| 19,000 | $910.86 | $420.99 | %216.36 |
| 27,000 | $910.86 | $573.70 | %158.77 |
Making a court challenge.
Local landlords have a case. If you are not a local landlord, you will need to analyze your water authorities rate resolution carefilly and contact an attorney.
Your first challenge is the collection of data. Some of the data you may want will have to be obtained during discovery after filing a complaint. What data you need will be up to your individual case, however, I will take a SWAG at a list to be helpful.
- Collect as many past water bills as you can. Your water authority can help with this.
- A large sample of billing data across all classes and tiers over as much time as possible. (During discovery or FOIA.)
- The water authorities current and past rate resolution going back as far as you can. (During discovery or FOIA.)
- Several rate resolutions from other comparable water authorities.
- Engineering studies used to establish rate resolution and authors contact information. (During discovery or FOIA.)
- Meter testing schedule, test data including results, and costs for ten years or more to properly gauge compliance with the law. (During discovery or FOIA.)
- Any operational, service, repairs, and planned improvements data, including financial, the water authority has. (During discovery or FOIA.)
- Any demographics concerning water users to include income, age, education, employment, appliances, habits, etc. (I used city-data.com, but you may want more detail.)
- Any past complaints made to the water authority such as from the Pulic Utility Commission, the water authority itself, or other source going back as far as you can. (During discovery or FOIA.)
- The water authorities public meeting schedule going forward.
- The transcripts of past water authorities past public meeetings. (During discovery or FOIA.)
Some of this data may be difficult to get. For example, complaints, past public meeting transcripts, etc. Some of this data should be publicly available upon request, however, water authorities often ignore requests. You can get all the information you need during discovery.
Here is a sample FOIA (freedom of information act) request. For Pennsylvania, the Right-To-Know Law allows a citizen to request information from any governmental agency.
John Smith
1234 Maple Ave.
Anytown, PA, 12345
This day, 17 April, 2019
Attn: Custodian of Records
Anytown Water Authority
9876 Main Street
Anytown, PA, 12345
Custodian of Records,
Under the Pennsylvania Right to Know Law, 65 §66.1 et seq., I am requesting to obtain copies and electronic data in CSV or spreadsheet format of the following public records:
The water authorities rate resolution, internal and provided to the public, for each year for the past 15 years.
The water authories last two rate studies, the company name, names, and contact information of the rate study authors.
All rules and regulations created by the water authority for each year for the past 10 years.
The water authorities financial information including revenue, expenses, funds held, any past project and future project plans and costs, and any other related financial data each year for the past 10 years.
The water authorities water meter inspection schedules, activities, inspection results, and costs for each year for the past 10 years.
The number of multi-family properties within the water authorities service area.
The number of single-family properties within the water authorities service area.
Any exceptions granted to multi-family properties regarding rate paying, the nature of the exception, the legal arguement supporting the exception, and reason for the exception.
An inventory of multi-family properties with individual meters per EDU with street addresses and EDU count.
An inventory of multi-family properties with a master meter with street addresses and EDU count.
The water authorites customer base data to include, but not include personal indentification data, street address, meter sizes, meter read dates, consumption, property type such as single-family home, multi-family property including the number of units, store, restaurant, club, hotel, etc., and the bill total each quarter for the past 10 years in electronic format.
The water authorities consumer complaints made in public meetings, in-person, by telephone, by letter, etc. and any resolution to complaints.
The water authorities public meeting schedule and transcripts for the past 5 years.
I would like to request a waiver of all fees in that the disclosure of the requested information is in the public interest and will contribute significantly to the public’s understanding of water billing rates, financial revenue, funds, and obligations, future plans, and responsiveness to consumer complaints.
The Pennsylvania Right to Know Law requires a response time within five business days. If access to the records requestied will take longer than this amount of time, please contact me with a reasonable expectation to recieve the requested records.
I certify that I am a citizen within the township of Anytown and request this information as a citizen for private purposes allowed under the law.
If you deny any or all of this request, please cite each specific exemption you feel justifies the refusal to release the information and notify me of the appeal procedures available to me under the law.
Thank you for your response.
Signed, John Smith
You will need to be able to demonstrate the following.
- That residential properties, single-family and multi-family, are in one single class.
- That residential multi-family properties are billed disproportionally.
- That residential multi-family property bills are arbitrary and capricious if possible.
- That the water authorities rate resolution differs from actual billing where possible.
- That required maintenance such as water meter testing and repair, and the general accuracy of water meters has not been properly attended to if possible.
- The rate of repair, frequency, and costs, are not representitive to all water users.
- That financial accounting has been adhered to according to the law.
- That engineering rate studies are outdated, flawed, or not adhered to.
Not all of this can be proved or will be helpful to every case. Where a case is filed showing that residential rates are illegal, you need to make a solid case that billing is disproportional to multi-family property onwers with as much data as possible. Do not hold back. Present as much data as possible to make this point clear and absolute.
Hiring an attorney.
You will need an attorney who specializes in public utility law. Most attorneys do not have this expertise. In Pennsylvania, the concentration of expert attorneys are in Philadelphia, Harrisburg, and Pittsburgh. Even then, most public utility law attorneys represent water authorities and not consumers. Some will represent consumers. Ask about the the attorneys expertise in representing cases regarding billing practices and ask about their previous cases including wins and losses. Some will consider filing smaller class-action suits. The attorney can use the class-action lawsuit as a template in other areas making one suit quite valuable. It is unlikely that an attorney will take on a case pro-bono (free) or on a contingency (pay if win). However, if the attorney is able to win, you should be able to recover the cost of the lawsuit. If you cannot afford an attorney, you may be able to get an attorney through a legal-aide law firm, however, these law firms are not likely to be public utility law attorneys. A legal-aide law firm may be able to get expert assistence. You should certainly ask.
You are certainly free to point to this page as your reference. You should, however, do your homework first and be ready to quote from you own study and fax your study to an attorney. Your study does not have to be this detailed, just make the point that you have a case. Brevity will certainly be appreciated.
Remember that attorneys get calls from cranks and misguided people all the time. It is easy to have a valid case and sound like a crank. We all do it. You will want to ensure that you have a solid case by bringing an undeniable case to the attorney. Afterall, that is exactly what this page was written for. It is my attempt to make an undeniable case to an attorney in the hopes of convincing the attorney that a wrong really exists.
Equality under the law.
Municipal water authorities are granted their authority by statue (law). And while any regulation is not law, but required by the authority granted by law, any regulation enforcable by police power, is in fact law in practice. As such, any regulation established by an authority granted by law is subject to the same scrutiny as law. A water rate resolution by a public water authority is a regulation and therefore any consumer is due equal protection under the law. Equality claims are difficult to prove, however, where one consumer can prove that a public water authority has discriminated against them and finds no recourse without filing a lawsuit, then proving that equal protection under the law has not been afforded the consumer should be provable.
Final word.
Each case is different and your individual case will have to analyzed by an expert attorney who specialized in public utility law. The goal of this page is to educate you on what is happening and what is coming down the pike. Many water authorities have taken advantage of the consumer for decades and that time is at an end. Some have already reformed their practices while others have yet to. You may have recourse for overbilling where it exists. As for local landlords, the local water authority is clearly violating the law with their rate resolution and something can and will be done about it. The question remains, How?
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