Portland-area water rates rising as infrastructure replacement needs mount

  • Mail this page!
  • Delicious
  • 0

PORTLAND — Driven by the need to replace aging mains and other infrastructure, the quasi-municipal authority that pumps water to the city and 10 surrounding communities may nearly double capital spending in 2015 and increase water prices by 3.8 percent.

The rate increase factors into the Portland Water District’s $39 million operating budget for next year, recently approved by district trustees, spokeswoman Michelle Clements said in a press release.

That amount is up 1.9 percent from the 2014 budget, which represented a 3.4 percent increase over the previous year’s, and was based on a rate increase of 3 percent.

The 2015 budget would add 70 cents to monthly water costs for a typical family of four, if a rate increase is subsequently approved, bringing the bill to just under $22.

The average monthly water bill for a commercial customer using 8,000 cubic feet of water would increase about $7, to more than $164.

Capital spending, financed by public bonds, is expected to grow from $12.8 million in 2014 to $25 million in 2015, most of which will pay for main replacements and upgrades at PWD’s waste-water treatment facility in the East End.

Rate changes, if approved by the state Public Utilities Commission, would take effect in the middle of next year. The changes would not affect sewer rates, which are set by individual municipalities, some of which contract with the PWD for treating their waste water.

Plugging a leak

Like water utilities across the state and elsewhere, the PWD has been working in recent years to overhaul its pipes and plumbing, much of which is deteriorating, obsolete or has exceeded its useful lifespan.

About 20 percent of the district’s piping, including 1,000 miles of mains, is more than 80 years old, according to Clements. It is predicted the area needs nearly $150 million worth of new mains over the next two decades to avoid water delivery problems.

The problems are already serious.

Four disruptive main breaks were reported in Portland and South Portland last week alone. In February, a break flooded downtown Portland streets, forced two schools to close for a day, and put the entire peninsula of the city under a boil-water order.

Such danger isn’t unique to southern Maine.

Much of the country’s water infrastructure, especially in the older cities and towns of the East Coast, was built in the early 20th century, in response to booming populations – and a growing recognition of the role of water supply in public health.

Now those pipes, made of sometimes poor grades of iron or even wood, and never designed to last more than a century, are rusting and crumbling away.

As a result, the U.S. will need to spend an estimated $1 trillion over the next 20 years just to “rehabilitate” its water infrastructure, according to consultant Ernst & Young.

A measured response

Despite the flood of new costs, the PWD has responded with a drip-like approach of small rate increases for customers.

“All water utilities are dealing with (infrastructure needs) nationwide,” David Kane, PWD’s executive director of administration, said in an interview. “We’re trying to make water rate increases incremental.” 

A 2012 study by the University of Michigan found PWD rates are about 0.5 percent of area residents’ median income, compared with the 2 percent national standard for water utilities. And rate increases have been below the long-term inflation rate for over a decade.

In contrast, cities such as Atlanta and San Francisco have seen water rates increase by over 200 percent since 2001, mostly as a result of infrastructure repairs.

Kane attributed the PWD’s modest increases to Sebago Lake, the 47-square-mile body that supplies nearly all of the district’s water, which is so clean it requires little treatment. Efficiency measures that reduced PWD staffing from 250 in 1996 to 178 today have also helped, he said.

Another reason is the district’s economies of scale. With 11 member communities, “we definitely get a benefit from that,” Kane said. And it’s a benefit other water utilities are hoping to replicate.

Strength of numbers

The PWD is by far Maine’s largest water utility, pumping 21 million gallons of water a day to 50,000 customers and a population of nearly 200,000 in municipalities including Cape Elizabeth, Cumberland, Falmouth, Scarborough, South Portland and Portland.

Most of Maine’s other water utilities serve individual municipalities, or combinations of two or three.

Just a few miles away, the Yarmouth Water District delivers about a million gallons daily to 2,900 customers in Yarmouth and North Yarmouth.

Bath has its own water district. Freeport has two, both of which outsource operations to a private company. Brunswick and Topsham share a single water district.

Statewide, there are more than 150 public water utilities chartered by the state. That doesn’t include many other utilities that provide private water service to hospitals, airports, campgrounds and the like.

Each chartered utility has its own board of trustees, its own staff, its own infrastructure. And each has its own rates, which vary widely. PWD rates, on average, were the fourth-cheapest in the state, according to 2013 data from the PUC. Bath’s water rates were more than twice as much, ranking No. 107.

This fragmented array of districts and pricing is a reflection of Maine’s strong tradition of “home rule” and the highly local differences in water sources, according to Dave Parent, president of the Southern Maine Regional Water Council.

The council was formed in 2005 to allow water providers to save costs through joint purchasing, mutual aid agreements, and other collaborations. It now includes the PWD and six other utilities, as well as 18 non-members.

“There’s definitely more interest in regionalization today,” Parent said Monday, after addressing an industry group on the topic last week.

Kane agreed, saying regionalization is a “generally a trend nationally … communities are talking about it.”

In Maine, the water districts of Gardiner and Hallowell, with a combined customer base of 4,200, are now considering consolidation. If approved by the Legislature and voters in both towns, the districts could join forces in 2016.

But the trend isn’t a panacea for water woes.

Parent cautioned that while regional utilities can save on some costs, they may not be able to solve infrastructure problems.

“One way or another, you might still have to run 50 miles of new pipe,” he said. And Kane said the PWD is content with its current make-up, adding that the district “waits for communities to come forward and ask” for services.

Meanwhile, rate-payers like Michelle Smith, of Portland’s North Deering neighborhood, are optimistic, but wary.

“I haven’t had any major complaints with (the PWD),” she said. “But then you hear about a water main break, and you wonder, what’s next? And when rates go up, is it worth it?”

0