The reason I selected these classes of customers is predominantly where the Base Charge inequitableness occurs. The current utility rate methodology is based on Equivalent Residential Connection (ERC) or meter size. Therein is the PROBLEM. This is not easy to explain, but I am going to try.
This methodology was developed by the American Water Works Association many years ago and I for one can’t understand their logic. Meter size, only determines the capacity of gallons flowing through the meter to meet the customers requirement. That is why one facility has a 5/8” meter (Low volume requirement) versus another facility need for a 4” meter (High volume requirements) of water to satisfy their needs. For each meter size a number of ERC’s is applied. Example of meter size: 5/8” meter = 1 ERC, 2” meter = 8 ERC’s, 4” meter = 25 ERC’s and 6” meter = 50 ERC’s. In layman’s terms, Single Family Home has a 5/8” meter = 1 ERC, the Marriott has a 1 – 1 ½” meter = 5 ERC’s and 2 – 6” meter = 100 ERC’s or total of 105 ERC’s compared to 1 ERC for a Single Family Home. Is that equitable? The methodology is archaic, since it does not take into consideration the demand on the water and wastewater (sewer) plants. Be that as it may, let me continue to explain the Current Rate Schedule. Base Rate charges were established for meter sizes and examples are as follows:
Water 5/8” – $33.68, 1 1/2” – $168.49, 2” – $269.54, 4” – $842.34, 6” = $1,684.72
Wastewater 5/8” – $27.46, 4” – $687.39, 6”- $1,374.67
Individually Metered Condominiums predominately use a 5/8” meter, the Hilton has a 2” and 4” meter and North Marco Utility has 4” meters and the Marriott has a 1 ½” and 2 – 6” meters.
Individually Metered Condominium is charge a Base Charge of $33.68 per living unit. So if you have a 126 unit Condo they are billed 126 x $33.68 = $3,243.68 per month.
The Hilton has 298 Hotel Rooms and they have one 2” meter and one 4” meters and they are billed 1 x $269.54 and 1 x $842.34 = $1,111.88 per month. Cost per Hotel unit is $3.73. In addition to the hotel rooms they have a swimming pool, Restaurants, Spa and Beauty Shop which will further reduce their unit cost.
The Marriott has 727 Hotel Rooms and they have one 1 ½” meter and two 6” meters and they are billed 1 x $168.49 and 2 x $1,684.72 = $3,537.93 per month. Cost per Hotel unit is $4.87. In addition to Hotel Rooms they have several Restaurants, Cocktail Lounge, Pools, Spa and Beauty Shop which further reduce their unit cost.
Individually Metered Condominium is charged a Base Charge of $27.48 per unit. If you have a 126 unit Condominium they are billed 126 x $27.48 = $3,462.48 per month.
The Hilton has 298 Hotel Rooms and they have one 4” meter and they are billed 1 x $687.39 per month. Cost per Hotel unit is $2.31.
The Marriott has 727 Rooms and they have two 6” meters and they are billed 2 x $1,374.67 = 2,749.34 per month. Cost per Hotel unit is $3.78.
North Marco Utility is a bulk user for Wastewater (Sewer) and they have several hundred users. They have one 4” meter for sewer and they own their own sewer infrastructure as well as their lift/pump station. They are billed 1 x $687.39 = $687.49 per month. The cost per unit is minimal.
The Individually Metered Condominium demand on the plants for 126 units that consumes on average 151,000 gallons of water per month and generates 151,000 of wastewater per month pays a combined base charge of $7,703.64 for the month. Their base charges per unit is $61.14.
The Hilton demand on the plants that consumes on average 2,500,000 gallons of water per month and generates 2,063,000 gallons of wastewater per month pays a combined base charge of $1.799.27 for the month. Their base charges per unit is $6.03.
The Marriott demand on the plants that consumes on average 6,500,000 gallons of water and generates 3,715,000 gallons of wastewater per month pays a combined base charge of $6,287.24 for the month. Their base charges per unit is $8.65.
North Marco Utilities demand on the wastewater plant is that it generates on average 2,100,000 gallons of wastewater per month and pays a monthly base charge of $687.39 for the month. Their base charge per unit is less than $1.00.
The above clearly demonstrates that the base charges are inequitable. Base charges to customers must be allocated on their demands on the plants. Rather than recommending another methodology at this time, I will continue to point out other inequitableness in the current Utility Rate Schedule at a future date.
Equitable? Inequitable! Part Three
Water and Wastewater Rates
This is my third writing concerning the equitable or inequitable of the current Marco Island Utility Rate Schedule. I am now going to compare the customer class of Individually Metered Condominiums to Master Metered Condominiums.
Master Metered Condominiums prior to Fiscal Year 2006 were charged a Base Charge determined by meter size, same as large Commercial Customer are being charged now. History: In Fiscal Year 2006 the Utility with the guidance from a majority of City Council change the Water Base Charge to Master Meter Condominiums from meter size charge to a charge of 75% of Single Family Home, one ERC charge, or .75 x $33.68 = $25.26 per Condominium Unit. I asked for a copy of the worksheet that determined that percentage, but it was never made available to me for my review. While I was a member of the Utility Advisory Committee and Utility Advisory Board I questioned the merits of that change as to why it was not applied to other class of customers? My question fell on deaf ears. When I made the statement to Council that the methodology change increased the revenue to the Utility by $1.1 million, silence occurred; hence that comment also fell on deaf ears. In a subsequent year the same 75% of a Single Family Home Sewer base charge was to be implemented on the Wastewater (sewer) side to Master Metered Condominiums, but that never materialized.
Now let me proceed with the comparison of the two classes of Condominiums. There are 1,505 Water User INDIVIDUALLY Metered Condos and 9,891 Master Metered Condos and 1,502 Wastewater User individually Metered Condos and 8,510 Master Metered Condos.
In my part two segment I used an example of a 126 unit Individually Metered Condominium and I will do the same here and compare it to a 129 unit Master Metered Condominium with a 4” size meter.
The Individually Meter Condominium pays a Base Charge of $33.68 per unit for Water or 126 x $33.68 = 4,243.68 per month, and a Base Charge of $27.46 for Wastewater (sewer) or 126 x $27.46 = $3,459.96 per month for a combined total of $7,703.64 per month. The base cost per unit is $61.14 per month.
The Master Metered Condominium pays a Water Base Charge of 75% of a one Equivalent Residential Connection (ERC), of 75% or .75 x 33.68 = $25.26. The Base Charge for Water is 129 x $25.26 = $3,258.54 per month. The Base Charge for Wastewater (sewer) is based on Meter Size and they have a 4” meter. The 4” meter Base Charge is $687.39 for the month, for the building. The base charge per unit is $5.33. The combined Base Charges is $3,945.93 per month. I have to adjust the sewer base charge because this type of condominium pays $1.09 more per 1,000 gallons to process their sewage, $1.09 x 191.000 gals. = $208.19. The adjusted base charge for an apple to apple comparasion is $4,154.12. The cost per unit is $32.20 per month.
The Individually Metered Condominium pays a combined base charge of $3,549.52 more than a Master Metered Condominium or 46.1% more.
As a point of information all Master Metered Condominiums that has a 4” meter, their base charge for wastewater ranges from $2.59 to $7.63 per unit.
Summary: Individually Metered Condominium consumed an average of 151,000 gallons of Water per month or 1,198 gallons per unit. Master Metered Condominium consumed an average of 191,000 gallons per month or 1,481 gallons per unit. Both Condominiums are low volume users of water and producers of wastewater (sewage), but their Base Charges are considerably different.
This is another prime example of inequitableness in the Current Utility Rate Schedule by class of customers.
Respectfully submitted, Amadeo Petricca
331 Regatta Street, Marco Island, Florida
Watch for Part Four to appear in the next edition of Coastal Breeze News.