Environmental Protection Commissioner Cas Holloway today proposed a 7.5% increase in the Fiscal Year 2012 (FY12) water rate to the New York City Water Board.
The Department of Environmental Protection (DEP) is responsible for proposing a water rate that meets the financial obligations necessary to provide water and wastewater services to more than nine million New Yorkers, and the Water Board is responsible for establishing the rate following the proposal and subsequent public hearings. The 7.5% rate increase proposed for FY12 is a 35% reduction from the 11.5% rate increase that was projected last year when the FY 2011 (FY11) rate was proposed, and is the first single digit water rate increase in five years. The new rate proposal also includes a continuation of a 2% discount for direct debit subscribers, provided that they also sign up for paperless billing. For customers who take advantage of the discount program, the effective rate increase will be 5.4%.
“When I became Commissioner last year, I committed to take every reasonable step to keep water rates as low as possible—and still meet DEP’s fundamental obligation to deliver high-quality drinking water to nine million New Yorkers, and treat 1.3 billion gallons of wastewater that the City generates every day,” said Commissioner Holloway. “That task is particularly challenging given that federally mandated, but unfunded construction projects account for nearly 72% of DEP’s capital commitments since 2002. This has driven up our annual debt service costs by approximately $700 million over the same time period—an unsustainable pace for New Yorkers who are struggling to make ends meet.
“Despite this, we took immediate steps to significantly reduce operating costs, control capital spending, and stabilize revenues through investments in new technology that also improves customer service. Due to these efforts, the proposed water rate increase for Fiscal Year 2012, is 7.5%, a 35% decrease from the 11.5% increase projected at this time last year. Any rate increase will be difficult for New Yorkers to bear in these challenging economic times; to mitigate the burden of the coming years’ necessary increase, we are offering a 2% discount to customers who sign-up for paperless billing, and who agree to pay their bills online through direct debit. In the coming year, we will continue our efforts to reduce operating costs, and at the same time, provide the world-class drinking water and customer service that New Yorkers expect and deserve.”
The significantly lower-than-projected rate proposal was the result of a number of factors: DEP initiated an 8% across-the-board budget reduction in FY11 that has a recurring savings of approximately $76 million per year, with a second round of budget cuts planned for FY12; water usage is approximately 3.4% higher this year, largely the result of a very hot summer; and revenue is 3% above original projections in part due to a more stable revenue stream because of wireless meter readers that have been installed in more than 76% of DEP’s 835,000 accounts, decreasing the likelihood of estimated bills and billing disputes.
The 7.5% rate increase proposal reflects the amount of additional funding that DEP needs to cover its budget, including debt service and operational expenses. Based on an average consumption of 80,000 gallons per year, the typical single-family homeowners will see an increase from $816/year to $877/year for water and sewer bills – an additional $5/month. An average multi-family unit with metered billing will see an increase from $531/year/dwelling unit to $571/year/dwelling unit – an additional $3.30/month.
The proposal includes an extension of the 2% discount for customers who sign up for direct debit payments and paperless billing. This one-year extension of the program program will reduce the average single-family homeowner’s rate increase from $61/year to $44/year, and the multi-family unit increase from $40/year to $28/year. Customers can enroll in the direct debit and paperless billing program at www.nyc.gov/dep.
DEP has one of the largest construction programs in the region, supporting roughly 6,000 construction jobs for each of the next four years. This capital program is responsible for critical projects like the City Water Tunnel No. 3, which will provide crucial supply capacity to the five boroughs; the Staten Island Bluebelt program, an ecologically sound and cost-effective stormwater management system; the city’s Land Acquisition Program, which protects sensitive lands upstate near the city’s reservoirs in order to maintain their high water quality; and the installation of more than 800,000 Automated Meter Reading devices, which will allow customers to track their daily water use, more easily manage their accounts and be alerted to potential leaks on their properties.
A majority of the capital program is required by state and federal mandates. Of the $20.8 billion in capital projects between Fiscal Year 2002 to 2010, federal mandates account for 72% of the total cost, or $14.9 billion. These mandated projects, like the $3 billion Croton Water Filtration Plant and the $1.6 billion Ultraviolet Disinfection Facility, have increased the average annual cost to a single-family homeowner by $169/year. Largely because of the mandated investments, annual net debt service increased by 134% between FY 2002 and FY 2011, from $496 million to $1.2 billion, and it is projected to increase by an additional 17% in 2012.
The New York City Water Board has scheduled five public hearings for the upcoming FY12 water rate proposal: one evening hearing in Brooklyn, the Bronx, Queens, and Staten Island and an afternoon hearing in Manhattan. The dates and locations of the hearings can be found by visiting www.nyc.gov/nycwaterboard. Following the five public hearings, the Water Board will formally adopt the FY12 water rate on May 13 and the new rate will become effective on July 1, 2011.
DEP manages the City’s water supply, providing more than one billion gallons of water each day to more than nine million residents, including eight million in New York City, and residents of Ulster, Orange, Putnam and Westchester counties. New York City’s water is delivered from a watershed that extends more than 125 miles from the City, and comprises 19 reservoirs, and three controlled lakes. Approximately 7,000 miles of water mains, tunnels and aqueducts bring water to homes and businesses throughout the five boroughs, and 7,400 miles of sewer lines take wastewater to 14 in-city treatment plants. For more information, visit www.nyc.gov/dep or follow us on Facebook at www.facebook.com/nycwater.