Two Wichita City Council members indicated today that they want to begin eliminating a water rate differential that now has residential users subsidizing business customers.
One council member indicated support for keeping the subsidy in place, saying that a change could hurt business and damage the economy.
The council held its first public hearing today on plans to increase water rates for all customers next year.
While an increase is a near certainty, the key question is whether the council will raise rates the same across the board, or hike business rates more to start moving toward rate parity between residential and commercial users.
The public hearing on water rates followed a 3 1/2 hour public hearing on the Douglas Place development and drew only one actual member of the public, Kathy Dittmer of the Wichita Independent Neighborhoods Action Committee.
“We are concerned that the citizen is subsidizing the businesses in the area and worried about that continuing,” Dittmer said. “We really don’t need to be subsidizing that water use.”
She also called on the council to expand the public hearing process out into the community to give more people an opportunity to address the issue.
Two council members, Lavonta Williams and Janet Miller, indicated they agreed.
Miller told City Manager Robert Layton she would like to have city staff make a presentation on water rates to her district advisory board and at an upcoming district coffee gathering.
“As to the disparity on the rates… unless I learn something that would really change my mind, I definitely don’t think there is a very good reason for residential customers to be subsidizing commercial and industrial users.”
Williams requested city staff make a presentation at her district advisory board and at a district breakfast.
“I have always been one of those that does not want to subsidize the water on the backs of the residents, so I hope that you would give me some great information to take back to the community pertaining to just that fact,” Williams said.
Council member Michael O’Donnell signaled his sympathy for the business community’s argument, that addressing the subsidy issue now could hurt economic development. He urged Layton to meet with the Chamber of Commerce and other business associations about water rates.
“I’ve heard from a lot of business owners, because right now we can’t do anything that’s going to stop job growth,” O’Donnell said. “And I think by raising water rates, just like Westar (Energy) coming in raising utility rates as well, would be a huge problem, detriment to job creation stimulation, so we need to do whatever we can to keep those water rates down.”
At present, residential users pay about $2.05 more a month for their water than it costs to serve them, said Thomas Beckley of Raftelis Financial Consultants, a firm hired by the city to analyze the Water and Sewer departments’ costs and rates.
Business consumers as a group pay less than their cost of service, in effect shifting about $3.3 million a year in a subsidy from residential customers to commercial users.
To begin phasing out the disparity, the city staff is recommending increasing residential customer rates for water and sewer service combined by 2.6 to 3.9 percent depending on usage, with a larger 8.2 to 8.3 percent increase for businesses.
The city’s Water Utilities Advisory Committee — a business-dominated group appointed by Mayor Carl Brewer — is recommending that all customers’ rates be raised 5.9 percent for next year.