More than 70 percent of residential water customers in Toledo not receiving a senior discount are paying for water they don’t use.
That’s because the city charges customers who use anywhere from zero to 2,000 cubic feet of water each quarter the same amount: $49.87. It’s a quarterly minimum charge, a practice the city has had in place for more than three decades, officials said.
Ed Moore, director of public utilities, said charging a minimum is a way for Toledo to make sure it collects enough revenue to keep its water system operational. But some city council members are concerned the minimum rates unfairly burden low-income families and those living on a fixed income.
Councilman Sandy Spang said she was “shocked” to learn that so many regular residential water users — 71 percent according to city figures — don’t meet the 2,000 cubic feet usage threshold the minimum rate is based on.
“When I requested the information I had no expectation the number would be so high,” she said. “Clearly, a minimum met by so few customers is not aligned with the water industry best practice of basing rates on the actual cost of treatment and distribution.”
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City officials could not provide a dollar figure for how much money Toledoans are spending annually on water they don’t use.
The American Water Works Association’s guidelines for minimum charges say they can be viewed as “a means to recover a portion of fixed costs associated with investments to which all customers should contribute, because the utility continues to incur the fixed costs regardless of whether customers consumed water during that billing period.”
But minimums are generally set at a “relatively low level to equal an amount that is typically used by most customers in a month,” the guidelines show.
Ms. Spang said Toledo’s quarterly minimum charges need to change. She said she thinks about the single parent on a budget or the person on a fixed income, both trying to save money by cutting down on their water use only to see the same charges on their bills quarter after quarter. She is also concerned the practice provides no incentive for water users to protect the environment by conserving water, she said.
“Current policy raises concerns regarding equity and discourages conservation,” she said.
For the 29 percent of regular residential customers who do use at least 2,000 cubic feet of water each quarter, the city tacks on additional charges based on their actual usage above the minimum.
Those who are enrolled in the city’s senior discount program are charged a minimum based on 1,000 cubic feet per quarter. City records show 39 percent of seniors who qualify for the discount don’t meet their minimum usage.
Mr. Moore said most of the water system’s costs are fixed, and water rates have to produce enough revenue to pay for the utility to operate. There are about 95,000 Toledo residential customers who on average use about 1,800 cubic feet of water per quarter, he said. That’s 200 cubic feet below the minimum rate.
“I have to emphasize our water here in Toledo is some of the most affordable water in the entire country, and absolutely in the state of Ohio,” Mr. Moore said.
He acknowledged that even though Toledo’s rates are low compared to other cities, it may be time to revisit how Toledo’s quarterly minimum rates are calculated or whether it makes sense to continue using them.
He said his department has been working on developing an affordability plan, and he is hopeful it will roll out once a regional water authority is developed with Toledo’s suburban customers.
“We do recognize it may be time to update the way we bill, and we’re willing to look at that with this Toledo Area Water Authority,” Mr. Moore said. “We understand that affordability is an issue in Toledo.”
Mayor Wade Kapszukiewicz said the fact that quarterly minimum rates are set based on a water consumption amount that only 29 percent of regular residential ratepayers hit is proof that the existing system isn’t working. He said he is working to develop a regional water system with the city’s suburban customers that will make sure water rates are affordable for everyone.
“It is a problem,” he said. “And it’s an indication of why we need to fix our system.”
Councilman Peter Ujvagi said setting water rates, including the quarterly minimums, is a balancing act, and he wants to make sure the city is following industry best practices.
“We need to be equitable, but at the same time there’s a minimum charge that needs to be put on because we need to maintain the services,” he said. “It’s a balance between responsible management of the system and equitable charges that Toledo taxpayers pay.”
Mayor Kapszukiewicz expects to unveil his new plan for regional water this week.
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