Council Votes: 3/29/16 OAK RIDGE CITY COUNCIL SPECIAL CALLED MEETING SUMMARY

DOE WATER CONTRACT

The following represents an unofficial account of the discussion and vote on the 2016 extension of the DOE water contract during the March 29, 2016 City Council Special Called Meeting. The complete agenda packet is found here and here. No video of the meeting was made. Draft meeting minutes will most likely be posted at the city website as part of the April 2016 Regular Meeting Agenda packet.

The Bottom Line Up Front

Council voted 4-2 to extend the current water contract. Baughn and Hope voted “Nay” and Smith was absent.

The changes of this contract will result in an  8-11% cost reduction to DOE while residents and businesses are facing yet another increase this year estimated at 6%.*

DOE will now pay $1.68 per 1,000 gallons of water (per the finance director). Their previous rate was $1.89 per 1,000. By comparison, current rates for residents vary, but range from $6.99-$7.56 per 1,000. Commercial rates also vary, but those who use over 50,000 gallons pay roughly $4.94 per 1,000. Complete rate breakdowns  are found on page two of this document.  

A Brief History

In 2000, the City of Oak Ridge agreed to take over operations of the dilapidated water plant from DOE, who retains the right to resume operations of the plant.

DOE consumes about half of all the water that the city provides. Between 2012-2015, the city has increased water rates for all residential and commercial customers EXCEPT DOE. To date, rates have more than doubled for most customers except DOE.

In February 2012, the city changed its rate structure for water and sewer for its residential and commercial customers to a flat charge per gallon and instituted a minimum use charge. In December 2012, the city extended the DOE water contract for three years. (See original and extended contracts here: 2012 DOE Water Services Contract Extension, 2016 DOE COR Water Contract Extension Cover Letter 3-24 (2), 2016 DOE Water Contract Mod 077 Page 2, 2016 DOE Water Sevice Contract Extension Mod 077 SF 30 Unsigned). The flat contract amount was $2,075,000 for potable water based on a total usage of 53.5% (1.96 billion gallons).

*Whereas additional monies for capital maintenance had previously been part of this contract, this extension removed all of those monies and instead allowed for a case-by-case negotiation. In essence, the total contractual financial obligation of DOE was reduced. Nominal capital maintenance monies ($125K) were rolled into the flat contract amount in the 2016 is extension, causing some of the mathematical confusion.

The Reason for My Vote

It is the same as it was three years ago: “This contract negotiation was our only chance to negotiate rates for the next 3 years (in this case, one.) I question why we would impose higher rates on our residents and businesses but not on our largest water customer (DOE). I also question how many more rate increases our residents and businesses must face over these next 3 (1)  years while DOE will face none.”

What’s the alternative? Call their bluff and give them back the plant and its operations all together. While they scramble for resources, we immediately begin work on building our own water plant, one that is fit to meet only our city’s needs. (The current plant was built to meet an exponentially larger need which greatly contributes to our costs to operate it). The city manager has indicated in negotiations that the city intends to do this very thing over the coming months; however, the burden of this contract has been well known for many, many years and such actions should have started long ago. The fact that DOE doesn’t want the plant back gives us greater leverage than most want to believe. 

 

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12 thoughts on “Council Votes: 3/29/16 OAK RIDGE CITY COUNCIL SPECIAL CALLED MEETING SUMMARY

  1. It is my understanding that if a taxpayer uses as little as 5 gallons over the fixed amount, then he is charged for the next larger volume.
    Thus if I actually used 2005 gallons, I would be billed for 3000 gallons.
    The kicker is then my sewer bill increases also.
    Is this correct?

    1. That’s what happens at my house. I spent a year diligently watching the meter and when the reader-guy came by. If the usage crosses the lower threshold of the next tier, you get charged the next tier rate.

      I suggested to council long ago that they create smaller tiers or just charge a set price per gallon. The current paradigm promotes someone watching their meter, seeing they just peaked over into the next tier, then pulling another 900 gallons into a storage tank – no extra cost to the resident. In my case, I used half a unit for a years and years, and simply resent being charged for a full unit. IMHO, the system owes me a refund. BUT this is what you get with monopolies, they can run things how they see fit. Had we another source for home water, we’d see business models change in the competitive market.

      1. Even if pushed up to the next 1,000 one month, does it not even out the next? If I pay for 4,000 gallons because I used 3,005 one month, would that not mean that I pay for 1,000 less the next assuming an even usage of 3,995? Since we are all paying for 2,000 no matter what and most of us probably aren’t using into the next tier of 8,000, I presume that those who are penalized are the ones who typically hover under and occasionally go over 2,000. Correct?

  2. More short sightedness by a weak council. Thanks to TB and CH for seeing the big picture and at least trying to do the right thing.

  3. In general, these water and sewer hikes are FUCKING KILLING ME. Part of it is that I got used to only using half a unit a month then added two more bodies to the house so our usage has gone up. And part of it is because I think the City is falling down on customer satisfaction, based on how they are handling these price increases. My pocket-book can handle the increases, buy by principles cannot.

    I can’t speak to the plus and minuses of cutting the DOE a break on their bills, but I can say that if my bills keeping going up, theirs should too, even if not as much.

    And with residential rates as high as they are now, the City needs to create more pricing tiers. A few years ago, if you crept a bit into the 2 Unit Tier, you paid another $10 dollars or so (I don’t recall the exact difference). Now, after the hikes, that difference is so much greater that it’s effective cheating the consumers.

    Here’s what I think is better: Make the tiers based on cost difference between tiers, not based on gallons, so every tier is just $10 more than the one below it – the tiers remain the same, but the gallon breaking-points will shift with the market. Or create tiers every 250 gallons instead of 1000 gallons. Or simply go to a “price per gallon” system where the consumers only gets charged for what they actually use.

    But large and minimal tiers, combined with high rates, effectively creates an unethical paradigm that negatively impacts the consumer’s wallet as well as his respect for the supplier.

    1. Can’t disagree with your proposal, but it undermines their premise. The rate structure was developed to achieve a certain finance level in order to pay for the capital investments. What’s worse is that we are all penalized for conserving. Any way you slice it, the end user loses.

      1. Yeah, other things like the minimum fee (even if you use no water, you pay for the ability to have it) and the overall finances of the organization come into play when you restructure one’s pricing for goods and services.

        I’m not sure what you mean by ‘their premise’ though, unless you mean the paradigm they are using to charge customers to bring in the needed inflows, and that is precisely what I’m intending to undermine. I don’t intend for them not to get the money they need, I’m just showing a pricing plan that would 1) be more fair on a price/gallon perspective and 2) would then create more satisfied customers.

        Given that we have probably a number of people in town using minimal water (the single elderly come to mind, but minimalists like myself can also end up in the ‘under 1 unit zone’), and that there is a minimum price for the service, I suspect if the pricing change went to a ‘per gallon’ plan that we’d see more money coming from bigger consumers and less from smaller consumers – which is exactly what we’d want in an environment where we wish to promote water consumption (may not apply in E TN).

        The nice thing about trying new things – you can go back to how you did it before, or you can try a third new idea, if you don’t like it. I know it’s difficult with humans to change the status quo, whether it’s the price of the service (affects the consumers) or the pricing paradigm (affects the business), but sometimes it needs changing. Right now we have one change affecting consumers but no change on the other side of the fence attempting to correct that by pushing some change back on the supplier.

        If you can get me two years worth of data – monthly consumption in gallons, units charged, and income taken by every consumer (residential and commercial) – I could crunch the numbers and create a comparative simulation of new pricing approaches.

        However, life has taught me that no one would read said results simply because I’m ‘sticking my nose where it doesn’t belong’. Science (sociobiology to be precise) has taught me this is a side-effect from our social evolution. Living with you sapien sapiens is hard…nothing’s every easy…

      2. That seems about correct to me. Not following your 3005 and 3995 math, but I’m still groggy from a flu. It’s a ‘by the month’ charge – if you go over month after month, there is no ‘adjustment’ at the end based on overall annual usage, as I’ll show below.

        Here’s how things roll out in a timeline. Alternating months you are below the level then above it (by a bit less than you were below in the below months). Unit break points and price are not-accurate.

        MONTH USAGE TIER PRICE
        JAN 995 1 $10
        FEB 1004 2 $20
        MARCH 995 1 $10
        APRIL 1004 2 $20
        MAY 995 1 $10
        JUNE 1004 2 $20
        JULY 995 1 $10
        AUG 1004 2 $20
        SEPT 995 1 $10
        OCT 1004 2 $20
        NOV 995 1 $10
        DEC 1004 2 $20

        The USAGE TOTAL of the entire year is 11, 994. Divide that by twelve and you 999.5 units/month on average. That means that all those $20 charges really should be $10 charges to truly be fair to the consumer. The company is pulling in $180/year from you, but the consumer thinks he should only be charged $120 ($10 per month).

        So, let’s use this small example to see how to adjust this one consumers bill to at least ‘appear’ more fair, creating a happier customer, by going with a price/gallon rate.

        The company needs $180, the consumer is using 11994 gallons. That equates to being charged 1.5 cents per gallon. Now our monthly tally would look like this:

        MONTH USAGE PRICE
        JAN 995 $14.93
        FEB 1004 $15.07
        etc

        This single scenario leaves a lot out of the picture, such a price/gallon changes as you move up tiers in our existing paradigm, vacant houses with water turned on by no occupancy, deals on rates with individual customers, etc, but it does already solve one of the problems I’ve identified: unhappy customers.

        Customers getting a bill that fluctuates within 20 cents that obviously corresponds directly to the gallon usage will be happier than ones under the current paradigm.

        A smart consumer with a 1000 gallon tank would hoard 996 gallons of water the first time he noticed he’s gone into the next tier. Then for the next year he uses that 996 gallons so he need never go into tier 2 again. He’d pay the $20 fee once and then pay only $10/month for the rest of the year (or much longer actually, since the 996 gallons he hoards will actually offset his slight ‘overusage’ for SIXTEEN YEARS!

        Yes, you read that right and the math is correct. 996 gallons hoarded means you can pull 5 gallons from it for 199.2 months, which is 16.6 years.

        I don’t know about you, but I’m going to get myself a tank and hoard me some water and save (according to my example) me $996 dollars over 16 years [$60 ‘overcharged/year x 16.6 years]. In real life, the true pricing makes this even more appealing, and once you factor in that every unit you pay in water means a unit you pay in sewer, then the hoarding is even MORE appealing.

        Math, fun for the whole family.

      3. Also, we should look at what happens, or could happen, when an ‘estimated usage’ comes into play. When I was watching the readings, the meter, and the bills I did not see any estimated months – the reader-guy came each month.

        But if they do miss a month, the consumer can get screwed again, even more directly.

        Jan
        995 gallons used
        No meter reading

        Feb
        1006 gallons used
        Meter is read and shows a two month usage of 2001 gallons

        If the City divides 2001 by two, they will charge you the $20 rate for both months, not the $10 rate then a $20 rate.

        Again, I don’t know how this is done by The City because they do a great job at reading meters (in my experience), but this is a situation that could be problematic, unfair, and would also be resolved simply by going to a price/gallon paradigm.

  4. WAYS TO REDUCE YOUR WATER CONSUMPTION

    Rain barrels are easy to make with parts from the hardware store. I created a cache of containers under my front porch that stores roof runoff rainwater and feed into seeper hoses that water my plants. Any good rain will fill all 8 of my containers and lasts for months (less in the dry hot months like july and august). It’s a great way to cut down on watering costs and requires only annual maintenance to clear the tubes of gunk. If I ever get around to terracing the front lawn for farming, those barrels will be able to feed those crops as well (and it all comes from the sky for free).

    Allowing nature to be nature also can cut down on your lawn watering bills. My back yard is resistant to lawn quality grass for a few reasons (hard ground, bad PH, minimal direct sunlight) so I’ve just let the moss and violets and crab-grass take over. It’s not as lush as a real lawn, but it’s green and sturdy enough to halt erosion and I’m not having to seed, re-seed, apply lime, apply fertilizer, apply wallet crushing water.

    Minimizing your washing machine needs, as well as using the right amount of water for the loads you do, can also cut down your water consumption.

    Adding a pull chain to your shower so you only have water running when you truly need it (to get you damp then rinse you off) also helps. Just turning off the faucet can help, but a shower head with an ‘off switch’ is easier. And of course, taking less showers also helps. The human body actually needs some of those oils you wash off every shower. In fact, I’ve been told by doctors that showering without soap may be better for you skin than with it – it allows you to exfoliate but retains the oils. I tend to shower well and thoroughly every few days instead of washing lightly every day. You’re hygiene needs may dictate otherwise… I’m sure many of you shower twice a day, and perhaps we’re all better off for it. LOL.

    The other usage of water in a home is food prep and cleanup. Don’t let the faucet run full blast for the ten minutes you take to wash dishes. Fill a container, wash your dishes in it, then use the faucet to quickly rinse the soap and debris off at the end (or just wipe with a towel). You’ll use less water at the cost of inconvenience.

    Finally, you could get nearly off the grid if you so choose. You can store 748 gallons in one hundred (100) cubic feet of tank (that’s the equivalent of a 10′ x 10′ kiddie pool. Think of the water you could store in full sized above ground pool. If your property allows, get a pool, create a charcoal filtering system inside it and let the sky provide for you. If your pool can be placed uphill from your city intake valve, and your reservoir has enough volume (to create enough counter-pressure), you may be able to hook that reservoir directly to your home system allowing you to use the collected rain water in conjunction with the city water, or instead of it (unlikely unless you install some pressure pump system). Given the storage capacity of a pool, the cost of the pool and filtering mech, the cost of a pressure pump for using the water and pushing it through your home plumbing, and the rate of electricity to run said pump, it may be cheaper in the long run to just go 100% off the grid.

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