Does Utility Structure Affect Rates?
Posted on May 2, 2014 by Janice Thompson
Tags, Consumers and Utility Customers, Legislative & Political, Portland Water, Sewer and Wastewater
If you’re registered to vote in Oregon, by now you’ve probably received your voter pamphlet for the May 20th election. If you live in Portland, you might have heard or read about Measure 26-156. CUB’s board elected to take a neutral stance on this matter, so CUB is here to help shed light on this topic! We’ll be releasing a series of informative blogs before May 20th to help prepare voters just like you to make an educated decision on Measure 26-156. You can follow these updates by visiting our Portland Water, Sewer and Wastewater news feed. We’ll also be announcing new posts on our Facebook and Twitter feeds, so follow us on those channels to keep up with our new water and wastewater series!
Today’s update focuses on utility structure, and whether or how that structure affects rates.
Water, sewer, and stormwater services across the United States are provided by agencies with a wide range of structures. Each one of these structural categories incorporates some utilities with high rates, and some utilities with low rates. In other words, there’s no indication that the structure of a public utility is a primary factor influencing its customers’ rates. Measure 26-156 proposes to replace the Portland City Council as the body overseeing Portland’s water and wastewater services with a separately elected seven member utility board. Will this ultimately benefit ratepayers by lowering rates? Measure 26-156 does not offer an answer to this question; the text of the measure doesn’t provide any guarantee that rates will go down in Portland, or even that future rate increases can be lowered.
Portland is different from many U.S cities though, in that it’s run by the commission form of city government. Commission government was a product of populist reform in the early 20th century and has been replaced in most cities. Portlanders, however, have repeatedly voted to retain their commission structure.
Each Commissioner member of Portland’s City Council is responsible for administrative oversight of a set of city agencies, as well as setting legislative policy. The Commissioners-in-charge of the Water Bureau and the Bureau of Environmental Services (which oversees sewer and wastewater services) can unilaterally make changes to the budgets under their control, provided they obtain sufficient votes from other council members to approve and adopt the final budget.
When budgets are shifted for these public utility bureaus, no matter who is setting those budgets, rates can be affected. CUB is not inherently opposed to a change in Portland’s utility structure, but regardless of who is making budgeting and rate setting decisions, we believe that independent and vigorous review of utility rates must be incorporated into the decision-making process. The Portland Business Alliance and the City Club of Portland have both released studies** recommending a series of structural changes to improve governance and curb spending; in the case that any of these structural changes were implemented, CUB would still hold that independent review is critical to ensuring that rates are set fairly and based on sound investments.
**It should be noted that both of these studies recommend a “no” vote on Measure 26-156.
Look out for our next piece in this pre-election blog series, coming out on Monday May 5th and focusing on the circumstances that led to Portland’s rates being set at their current levels. Let us know what questions you have about Measure 26-156, or water and wastewater services in general, by contacting Janice Thompson at .(JavaScript must be enabled to view this email address)!
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04/05/17 | 0 Comments | Does Utility Structure Affect Rates?