CORNELIUS – A Cornelius leader who has participated in two groups studying the Charlotte-Mecklenburg Utilities Department says the utility is controlled by Charlotte’s political and business interests, and residents of the county’s other six towns and the unincorporated area cannot expect fair treatment.
“I firmly believe that the utility has been co-opted by city politics and business interests that are seeking very low rates for the many small users and a program of growing the system to provide developer opportunities and cash flow to building contractors,” Jim Duke, president of the Peninsula Property Owners Association, wrote in an e-mail to newly elected Speaker of the N.C. House Thom Tillis, a Cornelius Republican. Duke also sent the e-mail to Cornelius Mayor Jeff Tarte and Ron Charbonneau, a Davidson resident recently appointed to the utility’s Advisory Committee.
Duke previously chaired a north Mecklenburg citizens task force that first questioned a number of aspects of Charlotte-Mecklenburg Utilities’ operations. One recommendation from the task force suggested utility Director Barry Gullet review the utility’s water-sewer rate structure, and Duke served on a Stakeholders Committee, which advised utility officials about restructuring the rates.
In his e-mail, Duke criticized the utility’s permanent Advisory Committee, which has resisted review of the utility’s practices.
The utility Advisory Committee “is heavy with those folks who I believe have a conflict of interest,” Duke wrote. “They represent their industries and, far less so, the rate payers. Particularly discriminated against are those rate payers in predominantly residential areas that need water in higher amounts due to family size and the requirement to maintain single family homes well outside the city.”
In a second e-mail to the private consultant who made recommendations to utility officials, Duke said he believes residents of the town and unincorporated areas will get fair rates only if Charlotte City Council no longer controls the agency.
“Unfortunately, I see the only way to restore the utility to a true all-customer class orientation is to remove it from the purview of city government and make it a county- or state-managed utility business dedicated to providing safe water at reasonable prices,” Duke wrote in an e-mail to John Mastracchio, of Red Oak Consulting.
“What we have now is a system where the influence of a large constituency of city voters-customers push rates down for the lowest tier and up for those non-voting county residents in predominantly residential areas of the county.”
Duke said residential customers “with higher costs for the infrastructure to provide them water and sewer should pay their fair share,” but he doesn’t believe the utility should “artificially” lower the rates of those using the smallest amounts.
Those customers are not identified by income level and could include retirees living in expensive south Charlotte neighborhoods.
“I sincerely believe that the notion of subsidizing first-tier (lowest volume) customers is not an appropriate business model and represents a hidden tax to county residents,” Duke wrote to the consultant.
Duke wrote his e-mails just before and after hearing the consultant’s final report to the stakeholders group Nov. 17. Red Oak is recommending four changes to the utility’s rate structure, which it says will make the system more equitable while still providing the revenue the department needs to operate.
Right now, the department’s rate structure divides water use into four tiers. As customers use more water, they move up the four tiers, paying more and more per gallon of water. The fourth tier almost doubles from the third.
Consultants from Red Oak recommend four changes:
• Adding an availability fee that all customers would pay and is aimed at covering some of the utility’s built-in costs. Duke supports this fee, but George Beckwith, a member of the department’s Utility Advisory Committee, said the fee could add $6 to the lowest water users’ bills. “The people at the lowest end would see a doubling of their bill,” Beckwith said.
• Lower the rates for the first tier even more – the lowest volume users – and for the fourth tier as well. The consultant recommended lowering the Tier 1 rate, also known as the Lifeline Rate, to soften the blow from adding the new availability fee.
The utility would increase the middle two tiers to recover the same amount of revenue as the current structure.
• Adjust how the department charges sewer fees. Under the current rate structure, customers pay for sewer service based on their water use. But the utility caps its sewer charge at 17,952 gallons.
But officials say customers using more than 12,000 gallons are usually irrigating and, therefore, paying for sewer service on water that never reaches the sewer system.
Lowering the cap to about 10,500 gallons would more accurately reflect the volume of water discharged into the sewer system, the consultant said, but the utility would need to increase the sewer rate to generate the same amount of revenue as the current structure. The average customer would see an increase in their bills of less than $2, while the customers who use a lot of water would see their bills decrease some.
• Modify the department’s irrigation tiers. Currently, customers who have a separate irrigation meter are charged a higher rate for that water – starting at the regular third tier, or $2.69 for 6,000 to 17,952 gallons, and then jumping to the much higher fourth tier. Under the fourth change the utility could encourage conservation by charging less if those customers are using technology that conserves water.
In his e-mail to the consultant, Duke praised Red Oak’s work “under difficult circumstances.”
“What you proposed last night is likely the best that can be done given the current political climate and co-option of the business model by special interests,” Duke wrote. “You are a pro and your work is appreciated by myself and many others in the group.”
For the complete copy of Duke’s e-mail to Tillis, Tarte and Charbonneau, click below: