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How can utility rates be lowered?

Ideas floated to cut water, sewer costs — some viable, some not


by: TRIBUNE PHOTO: JONATHAN HOUSE - Floy Jones, copetitioner for the ballot initiative to shift control of Portlands water and sewer bureaus to an independent board and district, was out canvassing voters Monday in the Gateway neighborhood. For several years, Portlanders have heard a dizzying array of allegations about City Hall’s misuse of water and sewer funds. There’s been many a tale of politicians’ pet projects, alleged use of water and sewer payments as slush funds, and reckless overspending.

But as voters ponder a May 20 ballot measure aimed at wresting control of the water and sewer bureaus from city commissioners, for many it boils down to one question: Will handing the Bureau of Environmental Services and Water Bureau to an independent elected board lower their water and sewer rates?

No one can say for sure, because we don’t know who might be elected to the board and what policies they’d pursue.

But many ideas for cutting spending have surfaced during the past several years, and others might be considered by a board elected with a mandate to reverse Portland’s spiking water and sewer rates.

Here’s a snapshot of some of them, and how viable they really are.

n Don’t cap the reservoirs: Some of the impetus behind Measure 26-156 comes from neighbors who prize the scenic reservoirs at Mount Tabor and Washington parks and insist the city could have done more to oppose a federal mandate to stop putting drinking water in open-air reservoirs.

“You don’t need to cancel it, you simply need to delay it like New York City and Rochester, N.Y., have done,” says Kent Craford, co-petitioner for Measure 26-156, who has represented big commercial water users in the past. “I’m guessing we could still save over $100 million if we could stop the bulldozers right now.”

That would mean delaying the capping of reservoirs at the parks and stopping work at the partially completed underground reservoir at Kelly Butte in East Portland, designed to replace the Mount Tabor reservoirs.

City commissioners say the horse already has left the barn, that they’ve lost the fight to save the open-air reservoirs, and already have moved on to replace them. They see no prospects for continuing the fight and getting a different outcome.

• Cutting staff: Craford blames former city Commissioner Randy Leonard, who oversaw the Water Bureau, for a hiring surge at the bureau, taking it well above “historical” levels of around 425 full-time-equivalent positions. The bureau currently employs more than 570 people.

“I think we could go back to historical averages for sure,” Craford says. “The water system hasn’t grown since then; our infrastructure is not any larger than it used to be.”

However, that argument conveniently ignores the city’s oft-stated goal of addressing the Water Bureau’s aging pipes and related equipment now that the Bureau of Environmental Services completed its $1.3 billion Big Pipe project, designed to keep untreated sewage out of the Willamette River and Columbia River Slough.

City Commissioner Nick Fish, who was overseen the two bureaus since last year, points out that the Water Bureau has shed staff in three of the last four years, and expects to lose a few in the coming year. That would make 91 fewer full-time-equivalent positions in the bureau since 2009-10, Fish says. But the agency still expects to have around 570 employees.

Craford notes that a recent city “span of control” study found that 134 managers only supervise three or fewer staff members — 62 of them working for the Bureau of Environmental Services and the Water Bureau. “These two utilities have tremendously bloated middle management,” Craford says.

• Canceling or delaying big projects: Craford questions the Water Bureau’s rush to build the $59 million Willamette River Crossing, a pipe delivering water to the west side that’s designed to withstand earthquakes.

“That’s really unnecessary,” Craford contends. “We already have six (pipes over the Willamette); this would be the seventh.”

“You can at least defer it,” says Floy Jones, co-founder of Friends of the Reservoirs and Craford’s partner in the initiative campaign.

“That’s just playing Russian roulette with our customers, hoping there’s no seismic event,” Fish says. “All of our current pipes on the Willamette are very vulnerable to a seismic event; so says the state of Oregon.”

The Water Bureau serves not just westside Portlanders, Fish says, but delivers water to several suburban communities there that buy Bull Run water on contract with Portland.

• Lower the utility license fee: The city taxes its own water and sewer customers 5 percent of their bills, sending nearly $20 million a year to the general fund. An independent elected board could stop levying that tax, providing instant rate relief for customers.

Though the utility license fee is perhaps the biggest example of sewer and water rates being used for unrelated projects, initiative supporters don’t want to touch that idea. That’s because it means cutting politically popular police, fire and park services, the biggest agencies relying on the city general fund.

“I doubt that anybody is going to suggest that you can’t pay the utility license fee,” Jones says. However, she says the district might entertain freezing those payments, thus preventing future growth in the tax and hits to the general fund.

Fish says any attempt to cut the utility license fee could provoke a lawsuit from gas, electric and phone utilities, which might argue they shouldn’t pay a higher utility license fee to the city than the water and sewer district.

• Lower rates for big customers: Critics of the initiative fear the commercial water users bankrolling the campaign could put up their own board candidates who might lower rates to larger users — which would drive up rates for residential customers. Craford says initiative backers have not called for that.

However, other utilities have adopted different commercial rates for large users. And it’s reasonable to think a company like Siltronic Corp., the silicon wafer manufacturer that’s been the biggest donor backing the initiative, would want to see its investment through and get sympathetic people elected to run the water and sewer bureaus.

• Charge more in hilly areas: It costs more to pump water uphill in Portland’s West Hills, and some water utilities elsewhere charge customers for the true cost of service, rather than using a blanket one-size-fits-all rate. That could serve to lower costs for the majority of customers who get their water fed by gravity, running downhill from the Bull Run Reservoir.

“I’ve never heard anybody mention that here,” Jones says.

Craford says it would merely shift who pays, and not achieve the desired goal of reducing spending.

Fish says that’s the kind of policy that the Citizens Utility Board, which has been hired to provide independent advice to the city on water and sewer matters, might examine. So might an independent board. But Fish cautions about unexpected consequences: that policy might force residents in East Portland to pay more for sewer services, because they live farther from the city’s sewage treatment plant, Fish says.

• Reduce low-income bill assistance: Portland now pays $6.8 million a year to subsidize water and sewer bills for low-income homeowners, one of the most generous such programs in the nation. Some have suggested trimming those costs, but it’s also politically touchy.

Floy says anyone who has proposed that in the past advanced it as a “Washington Monument” proposal — one with no real intent of getting it passed because it’s so politically unpopular.

“I don’t think you should reduce rates on the back of low-income seniors,” Fish says.

• Rein in other spending: Jones has long complained about excessive spending for both bureaus’ construction projects, which she says have “Pearl District” price tags based on the costs per square foot.

“On all these projects, I think what we’ve seen is a culture of extravagance,” Craford says.

A board dedicated to cutting water and sewer rates might also want to cut employee health care and pension benefits, a major cost driver. Initiative sponsors don’t want to talk about that prospect for fear of arousing more opposition from public employee unions.

However, that, like so many other potential policies, is simply too hard to predict until voters approve the initiative and then elect a board to run the two utilities.

“The proponents have said that this ballot measure will reduce their water rates and their sewer bills, but they’ve never said how,” Fish says. “What they’re betting on is that a future board will cut spending and reduce rates.”

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