Friday, March 6, 2015

Forecasting Water & Sewer Rates: Con Game or Reckless Use of the Crystal Ball?

“Each system [water and sewer] as a whole, is assumed to experience revenue requirement increases of not more than 4% for each of the first ten years under [Great Lakes Water] Authority management.” -- Memorandum of Understanding (MOU) p.4, September 9, 2014.

“It is important to note that Veolia has not performed an assessment of current costs, nor verified that the proposed projections fit the 4% revenue increase requirement.”  Veolia Peer Review Report to the Detroit Water & Sewerage Department, p.ES-3, December 19, 2014.

“The GLWA board will cap annual increases in water and sewer billings at four percent a year for 10 years.”  Great Lakes Water Authority Frequently Asked Questions.

“The Detroit Water and Sewerage Department is warning customers that rates could rise an average of either 9.2 or 14.1 percent…” Detroit News, January 27, 2015.

“...[O]ne selling point [of Detroit’s bankruptcy settlement] was the assurance that annual rate hikes would be capped at 4 percent.” Id.

“Promising a 4 percent cap on rate hikes wasn't [the right thing to do]. It was reckless and misleading, and likely was never a real possibility.” Id.

“The cost of water in Flint would likely rise 30 percent or more if the city returned to buying it from the city of Detroit, emergency manager Jerry Ambrose is warning.” -- Ron Fonger, MLive, March 6, 2015

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