Detroit water rate cap was a broken promise
It seems counterintuitive that the less water you use, the more you pay for it. But that's the reality for Metro Detroit water customers.
The Detroit Water and Sewerage Department is warning customers that rates could rise an average of either 9.2 or 14.1 percent, depending on which proposal is adopted by the water commission. Either way, it would be the largest annual increase since 2002. For Detroiters, it could be even higher.
The blame is being placed on a drop in water usage in the region. Sales of water are down roughly 25 percent in recent years. Last year's decline is attributed in part to a rainy summer, which meant less lawn watering. In addition, the city of Flint has stopped buying water from Detroit, for a loss of $35 million in revenue.
And while the notoriously inefficient water department has been aggressively cutting costs — a 30 percent staff reduction over the past three years — it has not kept pace with the decline in water demand.
Even though it is treating less water, fixed costs remain high because the department must maintain the same pipes and treatment facilities. So without the predicted revenue stream for water sales, the alternative for the department is to raise rates.
The rate hike comes at an awkward moment. The three metro counties and Detroit agreed as part of the city's bankruptcy settlement to form a regional water authority.
It was a challenging deal to put together, and one selling point was the assurance that annual rate hikes would be capped at 4 percent. Now, residents are learning that was a promise that won't be kept.
Macomb County Executive Mark Hackel said he suspected the 4 percent cap was unrealistic before the deal was inked, but was prohibited from asking water officials for their assessment because of a court-imposed gag order. He believes customers were intentionally misled.
Hackel is right. The cap is unrealistic, and should never have been promised. Doing so only increases skepticism of the deal, and feeds into the narrative that suburban water customers are bailing out Detroit. But double-digit rate hikes are not likely to be an anomaly, no matter what happens to water demand.
This is a system that has been neglected for decades. It needs billions of dollars in infrastructure repairs. The promised efficiencies that will come with the new authority will ease the burden some, but not nearly enough.
Customers will have to pay to fix the system and keep it in repair. Better to level with them up front about the true costs rather than sell them the fantasy of low rates.
The hikes will be especially painful in Detroit, which has been trying to get delinquent customers to settle their bills. The higher rates will make it even more difficult for struggling customers to pay their monthly obligation. Increases in Detroit typically are higher than the average for the region.
Forming the regional water authority was the right thing to do. Promising a 4 percent cap on rate hikes wasn't. It was reckless and misleading, and likely was never a real possibility.