Public utilities want rate hikes

Spokane’s three publicly owned utilities are proposing a combined rate increase of 7 percent for 2006 even before the City Council decides whether to place an additional tax on city utility bills.

Public works officials unveiled their proposed fee increases to council members at a briefing Thursday, and council members said they are concerned about the cumulative impact of higher rates and taxes on low-income residents.

An average residential utility bill for water, sewer and garbage service currently is $68.48 a month, and that amount is based on the use of a mid-size garbage container and a moderate amount of water. That same bill would rise to $73.32 under the proposed 2006 rates.

At the same time, the council is being asked to raise the tax on city utilities from 17 percent to 20 percent for police, fire and other city services. The utilities would pay the tax out of reserves in 2006 and raise rates to cover the tax in 2007. The tax is equivalent to less than $2 a month on average residential bills, officials said.

Council members are considering cuts to utility charges to ease the burden on ratepayers. Specifically, they are proposing a reduction in direct funding for mandated clean-water improvements at the city’s wastewater treatment plant near Riverside State Park.

Councilman Al French said the wastewater utility could sell bonds to raise money for a portion of the $500 million in capital spending projected through 2017 to comply with the state’s enforcement of the federal Clean Water Act.

“We are hammering those at the bottom end of the scale,” French said, including low-income residents and senior citizens.

Marlene Feist, the city’s public affairs officer, said residents are already expecting higher bills for gasoline and home energy. Higher energy costs could also lead to higher food prices, she noted.

“Our council is certainly sympathetic to low-income residents in our community,” Feist said.

Currently, the city collects $7 a month from residential ratepayers in a pay-as-you-go program financed through a “rate stabilization fund.” The charge for sewer rate stabilization is proposed to increase to $10 in 2006 and $13 in 2007.

The water department is also collecting a rate stabilization charge of $3.50 a month for improvements to water lines and storage facilities, but that charge is not expected to be increased.

The sewer money is being used to pay for major upgrades, including four new sewage “digesters,” a series of underground storage tanks, ultraviolet disinfection and high-tech filtration of effluent.

Utility officials are arguing against a bond sale, in part because it would increase the overall cost of the improvements by $200 million in interest payments on the bonds. They also warned that state enforcement of the federal Clean Water Act could result in even more spending on wastewater treatment if the city is forced to stop putting effluent into the Spokane River.

The city and state are negotiating limits on how much phosphorus can be released into the river. Even with the proposed filtration, the city’s effluent would still add phosphorus to the river. Portions of Lake Spokane downstream from Spokane now violate water standards during low-flow summer months.

The city may be facing another $500 million in sewer costs if state ecology regulators take a hard line against the city and the region’s other dischargers, and that’s on top of the improvements already being installed, city officials said.

In a related development, Mayor Jim West last week was part of a five-member team of city officials who visited two bond rating agencies and a bond insurance company in New York as part of an effort to refinance $17 million in bonds on the city-county garbage incinerator. The trip cost about $7,000 and was needed to ensure a strong rating on the bonds, said Chief Financial Officer Gavin Cooley.

A successful bond sale, which is anticipated, will save city and county garbage ratepayers about $650,000 over the five-year bond issue, making the cost of the trip worthwhile compared with its value to residents, Cooley said.