The regulated UK market

In late 2009 OFWAT, the UK regulator, published a final determination for water prices for the next period.  On average, OFWAT decided that the water companies must keep customer bills flat while embarking on massive capital investment plans.  That produced the usual chest-beating from the regulated utilities who promised that the end of civilisation was at hand.  The Daily Telegraph, for example, reported in mid-January that “United Utilities is expected to embark on a’"major’ cost-cutting drive that could see it shed 10pc-20pc of its workforce, as it prepares this week to accept harsh restrictions on pricing set by the regulator.”

A longer story in the Financial Times later that month reported Professor Martin Cave, an expert in utility regulation at Warwick University, saying the he suspects that the industry has been “crying wolf”.  “It’s difficult to reconcile the cries of outrage with the fact that they’ve accepted the judgment,” Prof Cave said.

In the preceding five years bills had been allowed to rise more quickly than inflation. Profits were higher than expected as the companies were able to borrow at lower rates than had been assumed by OFWAT. Many investors, the FT suggested, had grown used to equity-like returns for risk levels more akin to fixed income securities.

Then, at the beginning of February, the price of shares in Northumbrian Water soared when it was believed that a Canadian-based Teachers’ Pension Fund was buying the shares – possibly even mounting a takeover.  Then on February 18 the Fund announced it was ruling out any such plans.  The stock price fell back.

Higher water bills

The North Carolina Charlotte-Mecklenburg Utilities said faulty electronic transmitters could be causing some unusually high water bills, but the department believes the vast majority of bill spikes are due to people using more water than they realize.  Faced with an increase in customer complaints about high bills, the Charlotte City Council asked Monday night whether the water billing software is billing correctly, and what they should tell constituents.

Last fall, residents of the Peninsula neighborhood in Cornelius complained of unusually high bills produced by the water billing software -- in some cases, more than $500 a month -- or abnormal spikes. Media coverage spurred more complaints citywide, and CMUD said it's struggling to investigate all of them.  Denise Foreman of CMUD said the department believes most spikes were due either to leaks or to people using more water than they realized. Another factor: CMUD raised rates in 2008, with the biggest increases being levied on the heaviest users.  But Foreman also said CMUD has investigated some complaints and has been unable to find a cause.  "One-time spikes can be a huge question," Foreman said. "We'd like to know why."

Bob Watson of Cornelius said the water bill at his business, a self-storage facility, jumped one month from the usual $30 or $40 bill to more than $500. "Something fishy is going on here," said Watson, who's part of a group trying to investigate the bills.  Council member Edwin Peacock, a Republican elected citywide, said he has received calls from residents who have years of water bills showing consistent usage -- then a one-time spike. After that, bills return to normal.  "How do we respond? How many people are we dealing with?" Peacock said.

Foreman said CMUD is confident its meters are accurate. She said they are mechanical devices, and the technology hasn't changed in 40 years.  A relatively new factor is that electronic transmitters now send meter readings to billing. Those were first installed in 2002, and Foreman said they can malfunction if moisture corrodes electronics or batteries wear down. The transmitters save the department about $1.6 million annually.  "We feel like we can trust our meters," Foreman said. "You can't program the meter electronically. They are mechanical devices. But the transmitters can mess up."

Saving water and electricity costs

Here are a couple of tips for water and electricity usage savings for 2010:

Replace your existing showerhead with a new low-flow showerhead. The water-efficient showerhead, coupled with only a 10-minute shower, will save 5 gallons of water over a typical bath and up to $145 each year on electricity used to heat the water.

To save hot water and the $24 to $40 in fuel to heat that water each year, wash your clothes in cold water. Choose a laundry detergent that's formulated for use in cold temperatures.

Getting the right rate

Yarmouth, in Canada’s Nova Scotia province, commissioned consultants to work out what the new water rates should be.  The rates were approved by Council.  The Yarmouth Water Utility was all set to entre the new rates into their water billing software.  And then … it emerged that the consultants had used the wrong base figures altogether.  The increase was to be a large one: 60 per cent in the first year, 22 per cent in the second year and 2 per cent in the third year.  However there was a problem with the way the rates were calculated. It turns out that the consultants who prepared the report didn’t use Yarmouth’s water billing base rates in calculating the new rates but rather those of another municipality.  The actual increase would “only” be 24.9 per cent in the first year, 21.9 per cent in the second year and 1.7 per cent in the third year.

The mistake comes from using a lower-than-actual base rate to calculate the percentage increase. All increases must first be approved by the province’s Utility Review Board. A hearing on the matter is expected to take place sometime in January or February.  A member of town staff detected the error during a review of the consultants’ report.  Have they been paid?  Why?

Stealing water

From opposite sides of the world come stories this week about stealing water.  There are multiple ways of doing this – getting water at a discounted price, by-passing the meter, or simply tapping the supply illegally are three of the most common.

In Mumbai commercial establishments have been found illegally tapping water meant for residential pockets in the city.  An audit on supply and distribution of water in the city has brought to light cases where commercial establishments are illegally consuming water meant for residential consumption.  The report, tabled before the standing committee of the Brihanmumbai Municipal Corporation (BMC) recently, cites 407 cases. It was compiled by the office of the chief accountant (water supply and sewerage department) of the BMC. Instead of applying for a commercial connection, these establishments have been tapping water from domestic lines.

The BMC has differential charges for domestic and commercial connections. It charges between Rs25 and Rs38 per kilolitre of water for a commercial connection. In contrast, the rates for domestic users range from Rs2.25 to Rs3.50. The report says commercial establishments have been masking their identity to avail of domestic water connections.  Of the 407 cases, 221 are in the western suburbs, 95 in the island city, and 91 are in the eastern suburbs. The illegal connections have brought to nought the BMC's efforts to combat water shortage by restricting new commercial connections. The corporation is denying connection for projects where the daily water demand is over two lakh litres.  Interestingly, instead of taking action and discontinuing water supply to the violators, the BMC has regularised their connections after penalising them. Many of these connections receive 24 hours water supply while several residential colonies go without water. The audit report has also identified 100-odd cases where water bills were not being regularly sent.

In Monterey County, California, American Water says it is keeping a sharp lookout for thieves making off with one of the Peninsula's most precious commodities — water.   Cal Am announced Friday that it is making a concerted effort to deter the theft of water from its system — most typically by tapping fire hydrants without required permits and meters.  "We have asked all our employees to be on the lookout in the past couple of months," said Cal Am spokeswoman Catherine Bowie. The utility, which serves most of the Peninsula, is under standing state orders to reduce pumping from the Carmel River, conserve water and to reduce losses from its system.

Bowie said losses to the water supply have run as high as 13percent, but the utility has reduced that to about 10percent in recent months. The primary causes are leaks in the system, malfunctioning meters and theft, she said.  The utility can't estimate what share of the losses is attributable to thefts, but given the tight restrictions on Peninsula water use, Bowie said, "Even if it's 1percent — that's too much."  Most thefts are probably committed by builders who tap into fire hydrants to provide water on construction sites, Bowie said. The utility has found about 10 instances of theft in recent months, including a couple of places where someone hooked into Cal Am's system by "reverse plumbing."

New water bills in Nova Scotia

The Nova Scotia Utility and Review Board has approved Annapolis County council’s request to amalgamate three county water utilities and to introduce new water rates, a municipal spokeperson said in a media release. The combined utility has been renamed The Annapolis County Water Utility. In 2008, the municipality engaged consultants to study the water structures in the water utilities. The objectives of the study was to:

1. consider the feasibility of combining the three utilities – Margaretsville, Granville Ferry and Cornwallis Park - into a single entity, with common rules, regulations and rate structures
2. to develop the documentation necessary to apply to the Nova Scotia Utility and Review Board for new rate structure(s) designed to make water works operations sustainable.

“We were operating each utility as a separate accounting entity; much like separate corporations,” said Annapolis County Warden Peter Newton. “Under the Nova Scotia Utility Act, we are required to maintain separate sets of records for each Utility and to have separate financial audits of each utility carried out on an annual basis. We are also required to submit separate annual reports for each utility to the NS Utility and Review Board. Combining the utilities into a single entity reduces the administrative workload and the audit cost.”

Laurie Emms further explained the benefits of this amalgamation by saying the rate structure for each utility is supposed to reflect the cost of providing service and reflected in the consumers’ water bills. This is often difficult to predict the annual cost of operating a smaller utility, and can more accurately predict the annual cost of a larger unit. For example, if a smaller utility is required to address three water main breaks per year (average), the budget is established to repair three breaks a year. If the utility experiences five breaks in a fiscal year, operating compliance becomes a problem. If the Utility is large enough to warrant a 10 water main break per year budget, an additional two, unpredicted breaks has a lesser affect on the budget. The overall goal of the municipality is to have a self-sustainable and cost-effective utility.  The combined utility will look to consolidate their water billing software.

American Water expands

American Water's Pennsylvania subsidiary announced today that it had spent about $935,000 to acquire three water systems in north-central and western Pennsylvania. The systems, which serve a combined 600 people, are in Clearfield, Centre and Washington Counties, Pennsylvania American Water said. The parent company is based in Voorhees; Pennsylvania American Water is based in Hershey.

The purchases were: The Wallaceton Municipal Authority in Clearfield County, the Boggs Township Municipal Authority, Centre County, and the Amwell Township Water Authority in Washington County.

Delaying price rises in Manila

Metro Manila’s two water distributors have agreed to forego customer disconnections and shelve rate increases to help customers reeling from the effects of storm Ondoy. Water consumers will continue to enjoy uninterrupted service this October should they fail to settle their bills for the period, Diosdado Allado, administrator of the Metropolitan Waterworks and Sewerage System (MWSS) said on Friday.

Manila Water Co. Inc. (MWCI) and Maynilad Water Services Inc. (MWSI) “have agreed to the initiative of the MWSS to implement a disconnection moratorium for [customers’] October water bill," Allado said in a text message. Manila Water has even given its customers “the option to pay for their October billing for a maximum term of 12 months," he added. The option “is to be applied to 79 barangays representing the areas hardest hit by storm Ondoy," he said.

In a separate announcement made during the same day, the Ayala-led utility said it has temporarily shelved a proposal to hike rates. The company distributes water to locations that remain flooded by the record amounts of rainfall brought by Ondoy. Instead of starting on October 2, the rate hike will be moved to November 1 this year

Ga., Ala. power companies have huge stake, influence in water wars

Georgia, Alabama and Florida have been quarreling for nearly 20 years over the Chattahoochee River. But there’s another player in the game, working mostly in the background, wielding enormous influence.  Georgia Power and Alabama Power, both owned by Southern Co. and both drawing huge quantities of water from the river, have huge stakes in the dispute. Perhaps predictably, their presence has simply given the states more to argue about.

The latest spat was prompted by Gov. Sonny Perdue’s recent decision to appoint the head of Georgia Power to lead a team of state business and political leaders that is advising the governor on how to proceed.  Alabama Gov. Bob Riley and Sen. Richard Shelby have decried the appointment of Georgia Power President Michael Garrett. But Perdue, calling the Alabama complaints “hypocritical,” pointed out Wednesday that Alabama Power has always had an active role in fighting the water wars.

Winnipeg's new utility

The Canadian city of Winnipeg's long-running saga about the creation of a new water utility seems over. After a marathon session, city council voted in favour of creating an arm's-length utility to manage Winnipeg's water and waste services. After a day that began with protests against water privatization outside city hall, a sometimes packed council chamber gallery heard barbed exchanges among councillors and accusations of grandstanding as the motion to create the new utility was passed by a 10-6 margin.

“(Today) I witnessed a display of hypocrisy and doublespeak that has become synonymous with the self-proclaimed official opposition to progress in our city,” Katz said during the meeting. “The sky isn't red, the world isn't flat, we're not privatizing water.”

City administrators have said the business-like, city-owned agency -- to be overseen by a board outside the city bureaucracy and possibly partnered with a private engineering firm -- might help the city better handle costs such as an estimated $600-million bill for planned upgrades to North End and South End water pollution control centres. Under the new arrangement, the city may work with private companies to complete sewage-plant upgrades and could partner with other municipalities to share infrastructure.

An estimated crowd of nearly 200 people converged this morning on the Main Street complex – the vast majority of them hoping to sway Mayor Sam Katz and councillors against a plan to launch a municipal utility. Numerous delegations also spoke to council at the meeting which stretched from 9:30 a.m. until 6:30 p.m., when the motion on the new utility was passed.

Council debated the core issue, several amendments to the utility motion and a motion – which was defeated – to defer the vote until fall after more public consultation and research could be undertaken. Several amendments to the utility motion were also passed including one that would require a referendum on any move to sell or privatize the municipal water utility, another that lays out rules for agreements between the city and capital region municipalities and for dealing with strategic partners and a third that keeps the setting of water and sewer rates under the city's control for the time being.

Saving water

Americans can save some of the 225 billion gallons of water (852 billion liters) wasted each year through over-watering by installing smart systems which deliver just the right amount of moisture. Homeowners and companies over-water their grass and plants by between 30 and 300 percent, said Chris Spain, chief sustainability officer at water management company HydroPoint, citing a report by the American Water Works Association.

"The reason for the waste is because of dumb technology," Spain said. "There are 45 million irrigation systems in the U.S. (controlled) by simple timers. They do a great job of keeping time but a lousy job of irrigating to what the land requires." City landscaping, or "urban irrigation," makes up 58 percent of urban water use, Spain said, adding that the water wasted generates over 544,000 tonnes of greenhouse gases annually.

Smart irrigation systems are programed to optimize water use based on parameters including plant and soil types and amount of sunlight, and also feature weather sensors that monitor soil moisture levels following rainfall.

Indianapolis Water's credit costs swell

Indianapolis Water's investment meltdown is hitting customers again. Moody's Investors Service cut the credit rating Friday on $920 million in bonds the utility had sold to lenders. Taking the credit rating down to A3 from A1 will raise future borrowing costs an undetermined amount for a utility that just increased water prices for its 1 million customers.

Moody's said the lower credit rating results in part from the recent decision by state regulators to allow only a 12.27 percent increase in water rates instead of the full 17.6 percent increase sought by Indianapolis Water. The utility had sought the emergency rate increase to make sure it had enough money to pay debts, carry out improvements and meet loan terms it had with bondholders.

The Indiana Utility Regulatory Commission approved a rate increase June 30 but refused the full 17.6 percent level. The commission said the water utility had not explained why the full increase was necessary. IURC also contended the water utility was poorly managed and should try to recover the money without burdening customers. Indianapolis Water was hammered when the meltdown on Wall Street set off a credit crisis in global markets. This in turn raised the utility's debt payments to $57.3 million a year from $32.1 million, Moody's reported.

The water utility's payments soared because it had earlier refinanced its debts in a way that allowed the interest on the debt to fluctuate with the market. But once the credit crunch set in, interests rate shot up automatically, not only for Indianapolis Water but for municipal agencies throughout the country.

Raising water rates in Kansas

If Wichita KA City Council members don't raise water rates now, they will likely have to do it later, water officials said Tuesday. That's because the utility's bond rating is on the brink of a downgrade that, based on city estimates, could lead to $36 million in increased interest rates. The only alternative would be to delay or shut down the aquifer recharge project that local officials have said for years is key to the city's future.

Council members greeted this news with skepticism Tuesday, noting that interest rates could fluctuate anyway. But they showed little interest in four other options, including a property tax increase. Instead, they poised themselves to vote on a $2 base rate increase for all water customers and a 5 percent usage increase every year through 2013. The city is stuck in this bind because rainy weather has led to less water usage, which means the utility has less cash to pay off debt on major projects. Finance officials plan to study how decreased water use might affect the utility's budget. The council will examine that next week and likely vote on an increase in two weeks. If approved, the rate increases could start in August. The water billing software rate tables will be adjusted accordingly.

More water prices rises

Wichita, Kansas is set to follow the world-wide trend to higher water bills. The monthly water bill would increase by $2 under a proposal that the Wichita City Council is scheduled to vote on 16 June. The proposed increase comes one year after Wichita's most recent monthly water bill increase of $1 and is meant to make up for an $8.8 million shortfall in projected revenue that the water utility experienced in 2008. If passed, the rate increase would be effective with customers' August bill. There are more rate increases to come. In August, the council is expected to consider a 5 percent rate increase for next year. By 2013, a family that uses a lot of water will be paying about 30 percent more for water and sewer services.

Getting it right in New York

It's no good trying to calculate a water or sewer bill if the underlying data is incorrect. A recently published audit of New York City's Department of Environmental Protection shows that the DEP still fails to ensure that it properly identifies properties that should pay water and sewer bills, and in some cases the failure goes back 15 years.

In 2005, The New York Times reported that about 231,000 water customers in New York City were late paying their bills — some by just a few months, others by decades. In all, these water delinquents owe the city more than $625 million in overdue bills and penalties.

Houses and apartments accounted for 90 percent of those unpaid bills, but the city absorbed the huge losses and passed on the costs to those who paid, rather than risking the political consequences of being seen as hardhearted.

The DEP is now starting to resume shut-offs for unpaid water bills.

Direct Debit

Direct Debit is a popular form of bill payment. It means that by the due date the customer's bank account is automatically debited with the amount of the bill. Some customers would like their credit card charged, rather than their bank account - arguably so they can get more frequent flier points! The problem is the merchant fee the credit card companies charge the utilities. Visa has attempted to address this issue by charging a flat rate fee rather than the merchant fee.

B-Pay View

e-billing in Australia is aupported by the banks, and a facility known as BPay View. BPay is a standardised electronic bill paying facility. With B- Pay View customers can manage & view all their bills online 24/7 from wherever they are. The benefits are:

Get organised: Customers can have a summary of all their bills and their due dates in one place.

Choose how to pay: Customers can still use BPAY if they receive bills online via BPAY View and pay from a bank account, credit card or use any other method each biller allows*.

Pay on time: Make instant payments with BPAY or schedule payments for a later date.

Be kind to the environment: Cut down on paper usage by choosing to receive bills online.

e-Billing

E-billing provides a faster, more efficient and convenient way to receive and check customer bills. It is increasingly used for property tax and utility bills (ie. public sector billing). Here are some of the advantages:
* It is interactive, giving the customer online access to more information on things like discounts and reliefs
* Customers can see their bill as soon as it is available
* Customers usually still have the choice to download and print their bill in PDF (Adobe) format if needed
* Each person named on the bill should be able to receive their own copy at the email address given for each person
* It helps to reduce printing and postage costs
* It helps to protect the environment by saving paper

Cycles & Routes (5)

The emerging technology is for some form of wireless or wi-fi data collection, which can be done daily or even more frequently. This allows for early identification of anomalies, such as water leaks, or potential tampering. However it usually breaks the traditional link between the CIS and the meter reading management software. Readings are held externally, since they constitute a huge volume of data, and the CIS periodically interrogates the meter readings data warehouse so as to get the data it needs to bill the customer.

Cycles & Routes (4)

One change the new technology brought about was the reduction in the importance of the route sequence. This is the order in which the meters are read, and was optimised so as to reduce the time the meter reader spent crossing roads and so on. With drive-by reads, both sides of a street, together in some cases with side lanes, can all be read in one pass. Trash trucks also do not need sequences within routes, usually picking up from both sides of the street at a single pass.