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The San Antonio Water System is getting ready to decide which of its customers will pay the most for water and which will pay the least. When they last did this, in 2015, they lowered the water rates for big businesses and increased them for most households.
This time, we need rates that are fair.
Some background: During the last rate restructuring, SAWS bet on a speculative deal requiring San Antonio to pay for 50,000 acre-feet of water (roughly 16.3 billion gallons) per year from the Vista Ridge pipeline. Buying and bringing that water 142 miles to San Antonio costs more than twice the costs of SAWS’ desalinated brackish water, the second-most expensive source. It’s over four times the cost of water from the Edwards Aquifer.
At the time, SAWS claimed it could sell 30 percent of that water to other towns, reducing our costs. None of those towns has signed on. Apparently, none of them believes it’s a good deal.
So, who is going to pay the roughly $220,000 per day that SAWS has committed its ratepayers to cover? That depends on what happens in the current rate-structuring process. SAWS’ Board has already approved a 52.4 percent increase in the Water Supply Fee part of the SAWS bill, beginning in 2020. Will residential customers continue subsidizing big businesses? Without changes, SAWS’ current rate structure will heavily burden families and small businesses. The people of San Antonio deserve water equity and justice.
Water affordability has become a serious problem nationwide, especially in cities like San Antonio. Although the area’s overall income has risen steadily since 2008, few working-class families have benefited. In fact, San Antonio’s poverty rate increased by nearly one percent in 2018 – edging out Detroit to give us the highest poverty rate among the nation’s 25 most populous metropolitan areas. Rising water and power rates could push more local households below the poverty line.
San Antonio is lucky to have public utilities for water, wastewater, and energy. Unlike profit-seeking corporations that sell water in a marketplace, SAWS is supposed to be more like a steward of the people’s water system and water supply. The central principle for SAWS’ rate structure must be: “Water for the People, Not Profit.” San Antonio’s City Council has the right – indeed, the duty – to set water policy to assert this principle. As a community, we must make sure that all residents’ basic water needs are met, at a price they can afford to pay.
SAWS’ rate structure matters. In 2001, SAWS added a Water Supply Fee to all customers’ bills to fund the acquisition of new water supplies. Initially, all ratepayers paid the same fee per 100 gallons used. The 2015 rate-structure changes transferred a huge proportion of that fee from “General Class” ratepayers to the bills of Residential Class customers.
How so? Under the ruse of “Conservation” and “Affordability” (objectives prioritized by the Rate Advisory Committee), SAWS created a so-called “Life-line Rate,” making the lowest Residential Class tier ridiculously cheap per 100 gallons. It didn’t help the poor because many low-income households were large and could not reduce usage to meet that threshold. They were hit with increased (regressive) fixed charges. The real purpose of that ultralow-cost tier was to justify a big cut in volumetric costs of water for nearly all General Class ratepayers.
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Not a real class, the so-called “General Class” is an amalgam of just about every class other than Residential. It combines Industrial, Commercial, Institutional, Multi-family Residential, and Municipal classes, thus blurring the distinctions among these classes’ needs. The businesses that benefitted most from that transfer were water-intensive industries, such as electricity generation, beverage bottling, silicon microchip manufacturing, and fuel refining.
The chart below shows the fees that would have been paid by Niagara Bottling, a water-intensive industry attracted to locate here by SAWS’ newly “abundant” Vista Ridge water. The company would have used about 830 million gallons of water each year. Political blow-back stopped that deal, but the 2015 rate change would have saved that company more than $2.5 million, just between 2016 and 2020. Residential users would have had to make up the difference.
By the end of 2020, Niagara Bottling would have saved $2,589,726. Here’s how the rate-structure change produced so much additional profit for water-intensive businesses: 1) The Water Supply Fee was a single amount charged per 1,000 gallons, and when there was a rate hike, that charge went up. 2) In 2015, the rate structure for the General Class was changed into a tiered rate, with four increasingly expensive rates depending on the amount of water used that month. The base rate was dropped very low, such that the new base rate did not get up to the 2015 level again until 2019. With each rate increase, the savings are compounded.
How does SAWS justify transferring so much money from the people of San Antonio to the profitable corporations that use so much water? It pretends that household water use is “discretionary” and business use is not. In truth, however, the decision to set up a water-intensive business is completely discretionary, as is the decision to expand one. Such businesses ought to pay for water at the highest rates, not the lowest ones.
Climate change is already making water resources more unpredictable and seriously at risk. To manage our city’s water supplies for resilience, SAWS’ rates must never incentivize businesses that would deplete precious aquifers during severe drought.
If San Antonio wants to create incentives for businesses, let the size of any discount be based on criteria that strengthen the local economy. Does a company create lots of good, steady jobs paying full living wages? Does it reinvest in our community? Or does it send its profits elsewhere, either as investments in other cities or as shareholder dividends? San Antonio needs to attract businesses with earnings that grow the economy here, not someplace else.
SAWS’ rate-structuring matters. Our public water utility needs to reverse its 2015 decision to make residential ratepayers subsidize large business users. It needs to divide the General Class rates into real water-relevant classes that don’t hide where subsidies go. SAWS should promote the public good, not private profit. It must prioritize the well-being of San Antonio residents. After all, Water IS Life.