WSSC New Rate Structure is Approved

Following year long outreach effort to engage their customers and other stakeholders, Washington Suburban Sanitary Commission (WSSC) has adopted a new tiered rater structure. Under the new rate structure the price for water increases as customers use more water and enter higher tiers (see chart below). This complies with the Maryland Water Conservation Act of 2002 and the Maryland Department of the Environment’s regulatory guidance that specifically identifies a tiered rate structure as a pricing strategy that encourages water conservation.

Though WSSC held or participated in more than 30 public meetings or hearings in the past year, there were only approximately 1,500 customers who attended the meetings and additional 2,500 who viewed the meetings online. WSSC serves 1.8 million residents through approximately 475,000 customer accounts. Less than 1% of the customer base participated in the process.

The reason for the new rate structure: The Maryland PSC directed WSSC to develop a new rate structure after ruling the current 16-tier structure was unreasonable because it was unduly preferential to low-usage customers. Under the newly approved rate structure, customers will be charged only for the water used in each tier. Currently, customers are charged at the highest tier of water used, back to the first drop of water.

Approximately 93% of all WSSC bills are for residential customers. The typical residential household size in the WSSC service area is reported to be three people. The new rate structure is expected to lower quarterly bills for a three-person household using 55 gallons of water per person per day. WSSC reports that 55 gallons is the average per person consumption for WSSC customers.

“The new rate structure sends a clear conservation message to our customers,” said WSSC General Manager and CEO Carla A. Reid. “This will allow us to comply with state law that requires public water systems to improve water conservation. The new rate structure also addresses affordability and significantly simplifies the rate structure for our customers.”

According to the WSSC, under the new rate structure, the average three member household will pay slightly less-$4.83 per quarter based on the FY18 revenue requirements. The rate structure was originally put in place to meet their pressing financial needs. The final rates adopted next year will probably be higher .

The new rate structure is intended to better align costs with rates, and to provide a more predictable revenue stream to pay for infrastructure improvements and debt service while being fair to all water users. At the end of fiscal year 2017, bonds and notes outstanding totaled $3,006.8 million, a $355.6 million increase in comparison to the previous fiscal year. During fiscal year 2017  WSSC needed to issue $382.0 million of Consolidated Public Improvement Bonds to fund new construction, rehabilitation and replacement of water and sewer infrastructure, and had to redeem $12.4 million in Notes as part of the debt service amortization. Funds from WSSC operations supplied $26.4 million as debt for repairs and improvements continues to grow.

For fiscal year 2018 WSSC has to pay $347,899,000 in principal maturities and $106,158,000 in interest less $ 3,279,000 in "Build America Debt Subsidies." The total debt service for fiscal year 2018 is $450.1 million. To meet the fiscal year 2018 debt service WSSC has sold it’s $459,250,000 Consolidated Public Improvement Bonds and it’s $299,255 Consolidated Public Improvement Refunding Bonds. With a slowdown in water use growth despite increasing population growth and increased capital investment needs to improve and repair the aging infrastructure, WSSC rates need to continue to rise for the utility maintain their systems, provide water and sewer to its customers, and pay its debts.