Newport's decision to establish a flat sewer rate backfired. What's being changed

NEWPORT – For about two months, residents were charged a flat minimum service charge for the use of its sewage system. That decision was quickly reversed when it was discovered that it was actually impacting many of the city’s most cost-sensitive and eco-friendly residents.

“There was no ill intention,” City Manager Colin Kennedy said at a workshop addressing the issue. “It was rooted in the desire to push the burden onto seasonal and dark homes in a fair and equitable way and we just had a lot more users that use low volumes of water … than we expected.”

The decision was reversed in a special City Council meeting held on Sept. 25 and a second reading was approved at the regular meeting the following Wednesday. At the Sept. 18 workshop, members of the council apologized to the residents, many acknowledging that they hadn’t considered the possible impact of the flat fee when they voted to approve the change as a part of the city’s budget setting process in May.

How did this happen?

The intent behind the change was to increase needed revenue for the Utilities Department without burdening year-round residents. In May, the City Council approved the ordinance amendment that established this new flat rate following advice from the Department of Utilities, which suggested that instead of increasing rates, which would impact year-round residents more, a base fee would put more of the cost burden on part-time residents with summer homes, who might use less water compared to their year-round neighbors, but who still create demand for the utility that the department has to maintain with a certain level of staff and equipment, adding to the overall concerns of the department.

The department calculated the base fee, which was about $81.18, based on a usage of 4,100 gallons at the existing rate of $14.80 per 1,000 gallons. The unintended consequence was that many Newport residents who closely monitor their water consumption, such as those on fixed incomes, were being overcharged.

“This 41,000-gallon minimum, I said, you know what, I’m going to take my first half-hour shower today, because it's not going to make any difference,” Newport resident Bill Hogan joked lightheartedly with the City Council at a workshop addressing the issue.

As soon as the first bill went out, councilors began hearing from residents who expressed concern over the change which was now several times what they normally paid. In addition, challenges cropped up with the billing process as staff were undergoing a transition to a new management software. The city also assumed that the budget process had been enough to communicate to the public that the change was coming, which Kennedy acknowledged as a mistake on administration’s end.

“There’s no excuse,” Kennedy said. “We will do better in the future. You have my word on it.”

Utilities director Rob Schultz explained at the workshop that the 4,100-gallon figure had previously been used as an average for all residential utility rates for the past decade, but the department hadn’t refined that number to get a better sense of the impact on an account by account basis.

What’s happening to fix it?

At the workshop dedicated to solving this issue, city councilors were tasked with figuring out how to right the problems faced by the residents while also tackling the funding gap the Utilities Department had sought to fill with the flat rate.

Kennedy, who took up his post after this decision was made, said he has been back and forth with councilors and staff trying to figure out the best solution. One suggested approach was to revert to what was in place previously and explore fee increases or other changes to the billing structure. For example, the city bundles wastewater costs and stormwater costs together under one Water Pollution Control fund, paid for through water utility rates. Kennedy suggested that splitting that fund, as other municipalities have done, could help, but that is a long-term goal.

“Stormwater is what’s driving this, and right now, we have a proxy of necessity and that is water consumption,” Kennedy said. “That’s modestly a good proxy for sewer, but it is not a good proxy for stormwater.”

Kennedy also said the city is looking into developing a “comprehensive rate structure,” through advice from consultants and vendors to improve the situation.

This article originally appeared on Newport Daily News: Newport's decision to establish a flat sewer rate backfired. What's being changed