The City of Houston filed a lawsuit against itself in a Travis County court as a preemptive measure to validate the recent water rate increase that went into effect June 1. The court ruled the steep increase to be valid, paving the way for the city to begin collecting at the higher rates.

The water system has reportedly been losing about $100 million dollars a year and city officials believe the rate increase is necessary to maintain the system and provide for upgrades to an outdated infrastructure. The hearing was held June 14 with Paul Bettencourt and Bruce Holtze representing the opposition as private citizens.

They hired Jason Mumm, founder and president of Stepwise Utility Advisors, to analyze a recent rate study published by the City. Mumm discussed past water rate discrepancies and the status of the current system during the hearing.

“There is a question of how much the increase needs to be and how it may be allocated among residential and contract customers,” said Mumm.

The rate study showed contract customers have been using about 60 percent of the water but the contracts only cover about 25 percent of the cost of that water.

“Normally we wouldn’t see that big of a difference,” added Mumm.

City representatives agreed contract customers have not been paying full cost for the water but they feel the issue has been addressed in the new rate allocation.

Water customers in single family homes will have a 30 percent increase in monthly water bills over the next four years, however, apartment and condominium dwellers will experience an immediate 23 percent increase. The difference in rate increases represents the cities effort to equalize the rates single-family home residents and apartment dwellers pay for water and wastewater services. City of Houston water customers residing in single-family homes have been paying at rates below the cost of delivering water to their homes and the four year rate increase schedule is designed to balance the cost of service with the rates customers are paying.

The initial rate increase for single family homes will be about 12.5 percent and went into effect June 1. The remaining increases will be part of the annual April 1 adjustments for the three years starting in 2011. The average home uses about 6,000 gallons of water per month and will see their water bill rise from $47 to about $60 per month once the full rate increase has been implemented. The last major rate increase was in 2004.

Recent rate increases have not be sufficient to generate the revenue necessary to maintain an aging system and at the same time meet legal requirements for water and wastewater systems. Residential water consumption has declined since 2004 due to an increase in the installation of low flow fixtures and appliances, and as townhomes and condominiums replace single family homes the per account usage has decreased as well. At the same time, the city must have capacity to support a drought demand and meet the cost of rising mandated fees and system maintenance.

For more information about StepWise Utility Advisors visit www.stepwiseadvisors.com/. For more information about the City of Houston Department of Public Works and Engineering visit www.publicworks.houstontx.gov/.