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Originally published Monday, September 12, 2011 at 9:23 PM

We're conserving, but water rates may climb

Seattle's residential water rates, among the nation's highest, have gone up almost 90 percent since 2000, but now Seattle Public Utilities is asking the City Council to raise those rates in stages an additional 25 percent by 2014. That would push the typical residential water bill from $31.70 per month to $39.71.

Seattle Times staff reporter

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Seattleites have heeded the call to conserve water — big time.

We've installed low-flush toilets and low-flow shower heads, purchased waterwise dishwashers and washing machines, replaced luxuriant green lawns with drought-tolerant shrubs or given up watering altogether.

We've done such a great job of conserving that, according to Seattle Public Utilities (SPU), which supplies water to Seattle and many other King County cities, we're now using the same amount the region used in 1957 — even though the population has almost doubled.

Yet, we're paying more.

Seattle's residential water rates, among the nation's highest, have gone up almost 90 percent since 2000. SPU now is asking the City Council to raise those rates in stages an additional 25 percent by 2014, which would push the typical residential water bill from $31.70 per month to $39.71.

In the view of Seattle ratepayers, it may seem like a case of no good deed going unpunished.

"It's one of the hardest things to explain. 'I'm doing everything you said, I've installed new plumbing fixtures, I'm not watering my lawn and my rates are still going up,' " said Scott Rubin, a Pennsylvania-based consultant on utility issues.

But he said consumers need to know that their bills are still lower than they otherwise would be because they're using less.

Conservation also has environmental benefits. Less water used by households and businesses means more water in the rivers and lakes for salmon and other wildlife. But less demand also means less revenue to the utility, while the costs of operating the system and paying for a decade of infrastructure improvements continues to rise.

So, while the bills we pay would be higher if we weren't conserving, that's not much comfort when the bimonthly combined utility bill that includes garbage, sewage and stormwater totals almost $300 for the typical Seattle family of two.

On Tuesday, the City Council — which sets the city's water rates — is expected to take up SPU's proposed increases.

Mike O'Brien, the council's utilities committee chairman, said he already has sent SPU a long list of questions about the proposal, including what discretionary spending might be cut and whether any new investments can be delayed.

"We know people are feeling pinched right now, and it is our job at council to make sure that we are getting quality, safe drinking water at a fair price," O'Brien said.

SPU officials say the increases are necessary to maintain the dams, reservoirs, pipelines and pumps that convey the water from its two source rivers high in the Cascades to 1.3 million homes and businesses.

Revenue falls short

SPU revenues are down from 2008 projections, not only because people are using less, but because of the slump in the construction industry, with fewer new homes and apartments coming on line, and cooler-than-average summers.

Customers also are paying off loans on more than $400 million in major facility upgrades, including state-of-the-art water-treatment plants on the Cedar and Tolt rivers and lids for up to nine city reservoirs.

SPU's debt payments have quadrupled over the past two decades and now account for more than 40 percent of annual operating expenses. That's the equivalent of a homeowner spending almost half his or her salary on a mortgage, and having to pay all the other bills with what's left.

That's not out of line with the debt service being carried by other metropolitan water utilities, said Peiffer Brandt, an analyst with Raftelis Financial Consultants, which conducts an annual rate survey for the Association of Metropolitan Water Agencies.

He said federal regulations and terrorism concerns have forced utilities to upgrade treatment and filtration plants and protect the supply system's security. But, he said, large debt payments limit the utility's flexibility to offset future rate increases.

"Water is probably the most capital-intensive utility," Brandt said. "Whether anybody ever uses a drop, Seattle still has to pay for all that investment."

Opposition emerging

As the City Council deliberates the latest rate-hike request, some question the seemingly automatic increases and the rigor of the utility's financial management and oversight.

"The rate increases constantly amaze me," said George Allen, the Greater Seattle Chamber of Commerce vice president for government relations. "Homeowners and small and neighborhood businesses are operating on a thin dime. Before the city goes out and asks for more money, they need to look at ways to do business better, tighter and more efficiently."

He said the chamber likely will oppose the proposed increases.

Other skeptics include SPU's Water System Advisory Committee, which wasn't asked for input on the proposed rate increase.

"What's the point of having a citizens advisory group if there's nothing to advise on?" asked Tom Grant, a committee member and former staff attorney to the California Public Utilities Commission.

He also wonders whether the City Council will push back on the utility's analysis of projected revenues and expenses.

At a July briefing before a City Council committee, SPU Director Ray Hoffman said the utility planned a "fundamental review" of its rate structure and others across the nation before it returns in three years for approval of new rates. It hasn't done that for this round of increases.

But the utility has cut costs. SPU over the past two years has trimmed its budget $56.5 million and has eliminated 85 of 1,400 positions.

The utility's conservation efforts also have saved ratepayers in the region an estimated $170 million, SPU officials say, by delaying the need to expand the supply system to meet population growth. Existing water supplies now are expected to suffice until 2060, Hoffman said.

Although Seattle's per-gallon water rates are high compared with other large cities, what the typical customer pays each month places the city in the midrange nationally because we use less water, Hoffman said.

He noted that Seattle's rates also are high compared to those elsewhere because the City Council has included a 15.5 percent utility tax — with the proceeds going to the city's general fund, not the utility.

City Council President Richard Conlin, who chaired the council utilities committee for four years, said Seattle residents are paying not only for high-quality drinking water, but also to protect salmon and other endangered species.

Among the utility's big-ticket infrastructure investments in the past decade is the $100 million, 50-year habitat conservation plan for the Cedar River Watershed to build fish ladders, decommission more than 200 miles of logging roads and restore habitat for 83 threatened and endangered species.

Both the Cedar, which provides about two-thirds of Seattle's water, and the South Fork of the Tolt River, which provides the remaining third, are surrounded by forest preserves wholly owned by Seattle ratepayers.

Those forests act as natural filters and buffers against human intrusion and contamination, said Ralph Naess, manager of SPU's Cedar River Watershed Education Center near North Bend.

He said federal testing of municipal water supplies across the country several years ago found trace amounts of birth-control pills, painkillers, antibiotics, shampoo and the sort of hormones that produce "intersex" fish — male fish carrying immature eggs.

"Seattle water has none of that," Naess said.

Another dramatic example of infrastructure investment is the project under way to replace the open Maple Leaf Reservoir in North Seattle with a massive, underground vault that will hold 60 million gallons of water.

Uncovered reservoirs became a security concern after the Sept. 11 attacks, when officials recognized the vulnerability of municipal water systems. The cement lid on the Maple Leaf vault will be 11 inches thick, said Duane Narruhn, senior civil engineer on the project.

"The water will be safer," he said. "It makes it harder to do bad things."

Councilmember O'Brien said one of the benefits of living in Seattle is being able to turn on the faucet and get a "glass of cold water that tastes great." Over the next three months, he said, the council will be asking how much customers must pay to maintain that supply.

Lynn Thompson: 206-464-8305

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