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IWA chief defends, explains rate increase proposal

By Staff | Dec 3, 2008

Embracing yet another opportunity to defend the Island Water Association’s proposed 18 percent rate increase, General Manager Rusty Isler conducted a public presentation at the IWA’s facilities last Wednesday, which was attended by one reporter and one member of the public.

Since 1978, the IWA has increased rates only once — and that was back in

1992, when rates were raised 29 percent. Two years later, rates were

decreased by seven percent.

“We don’t charge it if we don’t need it,” explained Isler of the decrease.

Although 18 percent may seem like a pretty hefty percentage for a rate increase, Ilser stressed that half of the IWA’s customers use 8,000 gallons of water or less each month, which will result in a total monthly increase for those customers of approximately $6 or less.

Businesses such as car washes and laundry facilities that rely on water, utilizing as much as 50,000 gallons of water each month — which would fill more than seven standard tanker trucks — would see an increase of about $44.50 per month.

Since it has been more than a decade since rates were increased, the first question everyone wants answered is, “Why now?” said Isler. And he is ready with charts and graphs to illustrate his answer: “Because revenues are down and expenses are up,” he said.

In fact, with one month left to go, revenues from water sales in 2008 are projected to total $5,212,000, which is $833,000 less than revenues from water sales in 2007. The sharply declining revenues are due in part to conservation measures, such as mandatory irrigation restrictions and the installation of reclaimed water lines.

“Although everyone agrees that conservation is very important — and it is very important,” stressed Isler, “it comes at the expense of revenues for the Water Association, which must continue to provide water to its customers.”

Indeed, no matter what the water consumption, or lack thereof, the IWA needs to continue to monitor, treat and maintain the mechanism by which water is delivered to customers’ homes, and they need to maintain the staffing necessary to continue that operation.

Staffing such highly technical and scientific positions as exist in the water treatment industry does not come cheaply.

“Most of our employees have been with us here for more than 10 years,” said Isler, who is proud of the low rate of turnover. “It’s very difficult to find the highly qualified people that these positions require.”

Nevertheless, the IWA has managed to cut staffing by three positions since 1992. Currently, there are 33 full-time positions at the IWA, and three of those remained unfilled as of the end of November.

As if the sharply declining revenues weren’t enough, expenses have continued to skyrocket, despite the IWA’s best efforts to execute cost-cutting measures — which until now have been effective in preventing any rate increase. In addition to the price of diesel fuel, which increased 284 percent since 1994, the cost of treatment chemicals and health insurance has continued to climb exponentially, with no end currently in sight.

“Yet, the bill has gone up zero,” said Isler.

Even with an 18 percent rate increase, which, if approved will go into effect in March 2009, revenues are not expected to keep up with expenses.

“We could use 25 percent,” said Isler. However, cutting the expected costs of capital improvements from $1.5 million to $1.2 million will allow the IWA to keep the increase at 18 percent. “It’s not a permanent solution, of course, but we can put off some of our scheduled infrastructure replacement projects for a short time.”

In a letter to City Manager Judie Zimomra dated Nov. 28, 2008, Isler addressed many of the concerns that had been raised by members of the Council at its Nov. 18 meeting, including the potential necessity for substantial annual increases to the water rate, even if this 18 percent increase is approved. Isler pointed out in his letter that rates had actually decreased by seven percent in 1994, so the actual increase is only 11 percent over what customers were paying in 1992 and 1993.

“To look at it another way, if our rates had increased three percent per year over that period, consistent with how Sanibel wastewater rates are handled… our rates today would be 65 percent higher than they were in 1992,” wrote Isler, adding that the IWA has previously resisted the temptation to request automatic annual increases, such as is currently in practice by the city’s wastewater utility. “Our members benefit more by our practice of only requesting a rate increase when we absolutely need one,” wrote Isler. “However, automatic rate increases is certainly one option that could be considered, if Council believes it to be a more attractive business plan for IWA in the future.”

The City Council will review and discuss Isler’s responses to its concerns at its next meeting on Dec. 16.