Black & Veatch Customer Rates Survey Sees 5% Increase
Black & Veatch released the results of its sixth "50 Largest Cities Water and Wastewater Rate Survey," a resource for water and wastewater utilities. The survey highlights customer charges for water and sewer service for residential, industrial and commercial customers.
“This survey is a tool for managers of water infrastructure to see how their rates compare with national trends,” said John Kersten, associate vice president and Water Industry lead in Black & Veatch’s management consulting division. “The primary source of income for these utilities to pay for operating, maintaining, expanding and updating their infrastructure is through water and sewer rate collections, which must be continuously adjusted to address rising costs.”
A key finding of the survey is that water and wastewater bills for residential use across the country have increased at a steady rate since 2001 – when Black & Veatch began producing the survey. Analysis of the 2010 survey results indicates the average annual increase in typical residential water bills is approximately 5.3 percent from 2001 through 2009, while the increase in typical residential sewer bills is approximately 5.5 percent.
This trend correlates with findings from The 2009 Report Card for America’s Infrastructure, published by the American Society of Civil Engineers (ASCE), showing approximately $2.2 trillion of investment is needed to improve vital infrastructure over the next five years. Overall, America’s grade is a cumulative “D” as noted by the ASCE.
The full survey results are available at www.bv.com/top50ratesurvey.
Black & Veatch’s analysis cites five key issues that influence rates:
- Commodity price increases primarily in electricity, chemicals and natural gas costs. This is a leading contributor to operating and maintenance costs of water and wastewater facilities - highlighting the important inter-relationship or nexus of water and energy.
- Lower consumption and high fixed cost. In general, consumer usage is declining while many utility costs, such as debt service, are fixed. Because most pricing structures include volume-based charges, revenues are declining while costs are not.
- Pension obligations and health care benefits are prompting an increase in labor costs.
- Influence of wastewater legal action. Significant capital programs are being implemented in most major cities to comply with legal action related to wastewater system performance.
- Updating and replacing aging infrastructure are significant costs for most water and sewer utilities.