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Monday, April 5, 2010
There are strict rules when it comes to raising your water rates and so are the rules about arguing against the powers that would deign to raise them.
On Tuesday, March 29 the fight against a proposed 26 percent water bill hike for Parkville residents an increase that could translate into more than 50 cents per day or about $180 per year -- was taken to Riverside City Hall. And though participants in the public hearing learned that an increase was more than likely inevitable, Parkville certainly got its punches in.
Parkville residents and the rest of the crowd of 60 concerned citizens present for the meeting witnessed an engaging discussion with the Missouri American Water Company and the Missouri Public Service Commission (PSC)by Parkville elected officials Aldermen Marc Sportsman (Ward 4), Scott McRuer (Ward 2), and Mayor Gerry Richardson. By far the most prominent and insistent speakers in the audience, they were nonetheless congenial as was most of the assembly -- with staff from Missouri American and the PSC.
The meeting stood in marked contrast to the last public hearing held at the McCoy Meetin’ House at Park University in 2008, the last time Missouri American raised rates in the area by almost 29 percent. At that meeting, members of the Missouri Public Service Commission and Missouri American were not in attendance. Instead, those wishing to testify against the rate hike did so over an internet video link that was poorly received among attendants who felt the setup lent an air of unconcern.
In comments to The Luminary, PSC Chairman Robert Clayton admitted that the lack of face time was a mistake. He told The Luminary that the PSC would continue to hold public meetings during current rate increase requests and that the board would continue to hold question and answer sessions such as the one they held at Riverside on Tuesday.
There, more than 60 residents listened as some asked questions about the rate increase process. Parkville’s Aldermen Marc Sportsman and Scott McRuer asked the most pointed questions at the meeting’s start. Sportsman, a healthcare executive questioned why Missouri American seemed to be taken by surprise by maintenance to their system given their experience.
“Why aren’t these expenses figured into the rate?” he asked.
Denny Williams, the rate manager for Missouri American said that the process for charging at a utility was different from other companies.
“We have to spend money before we can go to the [PSC] and ask for recovery,” he said. “If a water main breaks, we have to fix it...we can’t raise your rates to fix it.”
Williams said the company was seeking to recover more than $2.2 million in repairs to the district. McRuer, a CPA, balked at the numbers.
“Where did the money go? It doesn’t appear the rate increase matches the level of investment we’ve seen in Parkville,” he said.
Williams responded by saying Missouri American had to deal with increased energy, equipment and labor costs, a point that McRuer seized upon quickly. He questioned the size of Missouri American’s workforce and their efficiency.
“Labor...is in a deflationary mode,” McRuer said. “How many people here are expecting a 20 percent increase [in salary] this year?”
McRuer’s comments sparked complaints from a resident in the crowd who said that his monthly bill for sewer and water services cost nearly $110.
“That’s more than my gas bill, it’s more than my electric bill...how can you justify that? It just doesn’t add up,” he said, adding that his household consisted of only “two empty nesters.”
The many Missouri American executives who attended the meeting (along with PSC officials) tried to put the number in context, saying that Parkville used more water per month than any of their 13 water and sewer districts. When asked, officials said the Parkville Water District was comprised of 5,675 residents; the Parkville Sewer District currently has 101 users.
When asked about the PSC’s auditing practices, the lead auditor from the PSC stood to assure those in attendance that her team gave “real audits” insofar as looking over the utility’s expenses and whether or not they could be deemed as justified under best practices.
Sportsman interjected after hearing that, arguing that under the current system – a utility spending at will, a state that audits them to see if they spent that money as described in order to justify a rate increase – was inherently flawed.
“That’s a business management function,” Sportsman said, saying that the company should have more clearly defined long term plans for their systems so regulators and consumers could reasonably know what to expect. “[The system now] actually offers a disincentive to becoming more efficient.”
“We know what we’re allowed to charge,” Williams countered. “Our rate is set. We have every incentive to make a profit,” he said, acknowledging that while Missouri American’s parent company has failed to turn a profit since 2001, Missouri American posted a 5 percent profit last year.
Mayor Richardson didn’t speak during the question and answer session but he was among the first to testify on the record.
“The profit and the value they have on their return on equity [are] excessive for a monopoly,” Richardson said. “A virtually guaranteed profit of five percent is perfectly adequate in this economy.”
Richardson, a retired engineer, also argued that the PSC should consider the fact that certain areas of Riss Lake were not receiving adequate water pressure, despite attempts to improve the situation by Missouri American.
“It has just not been boosted enough to make any particular effect,” Richardson testified, adding that the recent addition of a water tank and variable volume pumps were a disappointment for affected residents. “It isn’t doing any better...I don’t know why,” he said.
Rising Water in Parkville?
As reported in last week’s Luminary, the PSC is more than likely going to approve an increase – though not the increase Missouri American would like to see. The audit of the company has already been conducted – staff recommends an $11 hike instead of the requested $15 – but Clayton told The Luminary that public comment like Richardson’s alerted the board to situations that they were unaware of and provided them solid ground to investigate further and possibly lower the rate request when they make their decision in May.
Clayton also confirmed that the PSC is equally concerned with the utility’s ability to provide a healthy return on investment to their shareholders. The Office of the Public Counsel, Clayton, a lawyer himself, said was the ratepayer’s true advocate against any rate hike.