ORDER-2016-160 : Sewer Enterprise Operating Budget for Fiscal Year 2017 in the amount of $7,718,419.09 (Seven Million, Seven Hundred and Eighteen Thousand, Four Hundred and Nineteen Dollars and Nine Cents).

Transcript (~10 min @ 1:14:10)

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▶ 1:13:56 Speaker 7: dollar a day you couldn't touch that nobody would pick up on that ad but your public works department does the cost of water to a typical Melrose resident is about a dollar a day for water if you think about that again we're talking for about something that's essential for life. On the sewer side, you can put the same add-in. An add-in that says I want somebody to come and take away all the wastewater, all the sewage that I have in my house, all the garbage that I grind up and send down my garbage disposal, whatever quantities I do it, again 365 days, seven days a week, 24 hours a day, and take it and dispose of it in an environmentally sound way so that the sludge is treated, that the wastewater is treated and you're basically coming up with something that's nearly tap water by the time it's discharged into Boston Harbor and do that all for about two dollars a day that's what you get in Melrose it costs about two dollars a day for sewer service for the typical resident in Melrose to get service it's an amazing deal it really is and as I said I've traveled around the world of traveled around the country and parts of the world it's a it's frightening that they don't have the service that we have in parts of this country I've done a lot of work in Southern California and I think many of you probably seen heard about the droughts in Southern California they just don't have water we're very fortunate here in the Commonwealth of Massachusetts we do have pretty good water there's some comments earlier about the MWRA having extraordinary amounts of water there's no need to conserve water let me put that to bed right now that's not necessarily true it is true that today here in 2016 there is a lot of water the MWRA has but in 1980 early 1980s it didn't and some of you may be old enough to remember in the 1980s what was happening with all the headlines in the Globe and the Herald were the MWRA city of Boston everybody inside 128 is going to take all the water from the Connecticut River the Merrimack River and put it all into drinking water in Boston because the MWRA was at its limit at its capacity for its reservoirs so selling more than 300 million gallons of water a day. What happened in the early 1980s, and it started with the city of Boston, was people started putting in new rate structures to encourage water conservation. Boston Water and Sewer was one of the first to put in an increasing block system of water rates and sewer rates to encourage water conservation. And it succeeded. It succeeded very well so that the amount of water that's now pumped out of the MWRA system is in the order of 200 million gallons a day, far less than that 300 million gallon a day capacity that they were at in the early 1980s. And that's despite adding a number of communities to the MWRA system since 1980. In those 30 years, there's been a number of communities added and the consumption has dropped. And I think a large amount of that is due to the rate structures and the discouragement wasteful water use that water agencies the cities towns communities in the Commonwealth have done as well as the MWRA it's not just a matter of conserving water it's a matter of conserving capacity in the system the capital to build that capacity and the capital to build capacity in the wastewater system again I'll hearken you back to the turn of the century when Boston was not cleaning up its wastewater and had to put in a huge sewage treatment plant and hundreds of millions of dollars were built to put in treatment plants and there's capacity in the wastewater system the MWRA to take care of all that water that costs money and if we use water indiscriminately if we use it wastefully there's a lot more money that will need to go in to pay for the wastewater treatment so it's not just a matter of water saving it's not just a matter of wastewater saving the amount of energy it's used in producing water and treating water is extraordinary the carbon footprint is something that you need to be aware of I think everybody is basically in agreement the fact that we have a problem with climate change and we need to look at energy consumption and energy reduction as well and reducing water consumption reduces energy use in Commonwealth of Massachusetts and everywhere so this isn't just a simple matter of saving water it's saving an awful lot of things that saving energy it's wastewater capacity water capacity And I think that the institution of the different rate structures that encourage water conservation since the early 1980s, the proof is what's happened at the MWRA, where the water consumption has dropped from 300 million to 200 million gallons a day. I'm not going to tell you it's all from rate structure, but some of it certainly is. And I think there's no denying that a good chunk of it is. So that's something you do need to be aware of. There's also been a lot of discussion about costs. what is involved with costs what are they and how do they drive rates and every rate needs to be cost driven. Costs are just one element of what goes into setting water rates. I've sat on a board in the commonwealth that sets water rates I understand what you're doing is you're sitting here setting water rates and it's not an easy thing to do but there are a lot of different elements that go into it. I think one of the earlier speakers mentioned something about revenue sufficiency you have before you an ordinance of two different budgets you need to have enough money from your water and sewer rates to increase to recover all of those monies and they need to be make sure that it's sufficient even if it's a cold rainy summer or a hot dry summer the economy goes up the economy goes down all things that drive water consumption you need to have enough money so the availability to have sufficient revenues and predictability in those revenues are very important considerations it's not just a cost basis. Conservation is another huge element, and don't kid yourself that conservation isn't something that you shouldn't be thinking of as a policy consideration. It's something that's critical that you think of. The Department of Environmental Protection mandates that you do. There are conservation standards in the Commonwealth that say what kind of rate structures you have to have. Conservation is a very important thing. It's not just cost. Conservation and setting rates that set conservation is an important consideration. It's an important public policy consideration. Affordability. You've heard a little bit from your director about the program for the elderly for affordability. You may not think, some people in this room think that affordability is not an issue that should be considered, and that's fine. People all have a difference of opinion that we live in a democracy and people are allowed to have a difference of opinion. But I will suggest to you that this is an issue that has gotten considerable debate in open discussions for decades about looking at the affordability of utility services and water and sewer utility service. The U.S. Congress has stated, has decided that making water and sewer affordable is a national issue. It's not just one in the state. It's not just one in the city of Melrose. It's one that applies all over the United States. The U.S. Congress has said setting sewer rates and taking affordability into account is an important thing and it's something that you should be doing it's a policy consideration that you should consider it's got nothing to do with costs and yes anything where you provide something that at a more affordable lower rate does involve a subsidy and there's no question it involves a subsidy subsidy but it's something that again i think this country has decided on we certainly decided on it uh with rural electrification we certainly decided upon it as a country with making phone service available when when people didn't have cell phones you have to run wires to people's houses to have cell to have telephone service and providing that telephone service in rural places and people that can't afford it is clearly there the Department of Public Utilities has made it very clear that in setting rates for a lot of utilities that affordability is is something that that is done it's done in this state and it's a consideration it's not a cost consideration there is a subsidy in it but it's done you can get an electric rate that provides a discount if you meet certain income requirements in the Commonwealth, and that's pretty much universal throughout the country in all 50 states. This isn't something that's just Massachusetts. It's not something that's just Melrose. It's something that goes throughout this country that does that. And I can tell you from having worked in a number of other countries, it's prominent throughout other countries. So when somebody tells you that the only thing you should be looking at is costs, that the only thing you should consider when you're looking at rates is costs, they're wrong. They're absolutely wrong. There are a number of different factors and they're policy considerations. They're not policy considerations I make. They're policy considerations that you as a Board of Aldermen make on all of this. But they are considerations that you should be making and they are considerations that are common throughout the country and required, I think, throughout the country, certainly in the terms of conservation. DEP requires that in the conservation standards and setting permits for water withdrawals in the country. That's what I had for an introduction. I know it's getting late, and I don't want to take up too much of your time, but I wanted to set the record straight on some of these things that you've been hearing, and we have had dialogue, despite what you've heard, too, at those sewer committee meetings. Alderman Forbes knows about that, having been at those meetings afterwards, where there's been discussions afterwards, either formally or informally, too.

▶ 1:23:23 Peter D. Mortimer: Thank you, Mr. Woodcock. Mr. Fox, would you like to proceed?

▶ 1:23:29 Speaker 2: Yes, please. That's going to be very hard to follow. I apologize in advance. Thanks, Chris. I'm sorry. It's okay. That's why I like to go first, usually. You all have a memo in front of you that summarizes all this information that we're going to go through. So I'm going to go through it as quickly as we possibly can, just to open the floor for discussion. I think that's going to benefit everybody a lot more than just having me sit here and spew all this stuff to everybody in the room. But just real quick, just an overview, all the rate structures that are in front of you, all the options, they are meant to fund approximately $6.5 million from water rates and $8.7 million from sewer rates. That includes the operating budget that you heard about earlier on both the water and sewer side, but it also includes indirect costs. It includes the additional reserve funds that we're going to put into our reserves in fiscal year 17.