A process that could change the way San Antonio Water System customers pay for water is getting underway, offering a chance to take a deep look at how the water and sewer utility structures its rates and fees.
SAWS is beginning a rate study to closely examine its water and sewer charges for residential, commercial, and wholesale customers, among other users. For the first time since City Council approved the current rate structure in 2015, the municipally owned water and sewer utility is soliciting a consultant to study rates and putting together a 15- to 20-member rate advisory committee.
SAWS typically updates its rate structure approximately every five years. The last round led to the splitting of residential rates from four to eight blocks, eliminating rate differences based on the time of year, and lowering rates for businesses, multifamily residences, and other large users that consume the same amount or less water each year, among other changes.
Mary Bailey, SAWS’ vice president of customer experience and strategic initiatives, told the board of trustees Tuesday that changes to rate structures are typically “revenue-neutral.”
“The study looks at how costs are allocated and collected from various customer classes,” Bailey said. “The overall amount of revenue doesn’t actually change, it’s just a matter of who it’s collected from that may change.”
The process is already drawing the scrutiny of the local Alamo Group of the Sierra Club and other SAWS watchdogs. Trinity University Professor Emerita Meredith McGuire, one of the groups’ core members, has studied the rates thoroughly and said the last round of changes gave many businesses a break while disproportionately affecting residential users.
“My overall impression was it was taking advantage of the fact that a whole lot of good citizens were trying to do something good for their city, but they didn’t know enough to be able to ask the kinds of probing questions that would really be good for the people that they were there to represent,” said McGuire, who attended the advisory committee meetings at the time. “In many, many respects, the whole thing was rigged against the residential ratepayers.”
In response, Gavino Ramos, SAWS vice president of communications and external affairs, said the most recent advisory committee “was comprised of experienced leaders who were advocates for the average SAWS customer and who knew this issue better than many who attended the open meetings.”
“Led by former Mayor Howard Peak and current District 8 Councilman Manny Pelaez, many detailed and pointed questions were asked of SAWS staff,” Ramos continued in an email. “Couple that perspective with council member-appointed representatives, and the result was a fair rate structure for SAWS customers.”
At the meeting, Bailey pointed out that the last study led to a much lower rate for residential customers who use slightly under 3,000 gallons per month or less. Under the old structure, approved in 2009, residential customers who used up to 6,000 gallons paid the same rate; the current structure raised rates on water use in most usage levels above that initial 3,000 gallons.
Bailey said that in the upcoming study, SAWS staff will ask the consultant to look at potentially combining SAWS’ currently separate fees for water supply and water delivery, the difference between rates inside and outside city limits, and the approach to residential sewer charges. SAWS currently estimates sewer use based on customers’ three consecutive water bills between November and March, when customers aren’t as likely to be using water for lawns and landscapes.
SAWS staff will bring a rate consultant before the utility’s board for approval in July, Bailey said. The consultant’s duties will include looking at approaches other cities are using, as well as industry standards set by groups like the Water Environment Federation and the American Water Works Association.
SAWS Trustee Amy Hardberger, a water law expert who is an associate dean at St. Mary’s University School of Law, said that some communities are moving forward with water rate policies that some industry groups have been reluctant to embrace.
“Obviously, our job is that water needs to show up and we need to be able to pay for it,” Hardberger said. “I don’t think there’s only one way to do that.”
SAWS trustee Eduardo Parra, CEO of engineering consulting firm Parra & Co., said SAWS staff should make sure that the consultant selected understands “what San Antonio is and the fact that we have a lower income than most major cities.”
“I happen to work with many major national firms in which I have to explain, for example, that in the South Side, the credit reports on how much people spend on credit cards might not be representative of the actual spending, because a lot of the spending is done in cash,” Parra said.
SAWS President and CEO Robert Puente told the board that as part of the bidding process, SAWS asked consultants “what they thought of San Antonio and what their belief was of how San Antonio is made up.”
“Some of them answered it very well,” Puente said. “Some of them answered it by just pulling information off Wikipedia and putting it in their proposal.”
Bailey said the rate advisory committee will include one nominee from each City Council member, with the rest picked by SAWS to represent different customer classes: commercial, multifamily, outside of City limits, users of recycled water, and low-income customers. Any resident, property owner, business operator, or business association member served by SAWS is eligible to serve.
SAWS staff will soon begin soliciting nominations for the committee, with the trustees expected to vote on their appointment in October. The committee will have open meetings regularly from November through May 2020, with publicly posted meeting agendas and minutes and public comment periods.
SAWS officials plan to have the utility’s board and City Council approve the new rate structure in November 2020, with changes going into effect January 2021.