It’s forcing some districts to implement rate hikes. And that has the potential to make the situation more volatile than ever.
For most districts the problem was set in motion years ago. Their boards approved rate structures without plans for our current situation.
Ideally, rates include a fixed fee that fully covers operation costs and a use fee that covers the actual water used. If these fees are well established, then a drop in usage doesn’t cause the district to operate at a loss.
But that’s not how many districts operate.
In an effort to soften the true cost of operation, some of the revenue needed to run the district was buried in the usage cost. As long as water usage was at or near projections, everything worked out.
But now—with mandatory conservation efforts—usage is declining sharply. And as it drops some districts are facing an operational shortfall. The choice is to either operate at a loss, or to raise rates.
A drought-induced increase has the potential to be more emotionally charged than all your previous rate increases combined.
Why? Because many ratepayers are feeling betrayed. And frankly, they’re right to feel that way.
Based on the messages to conserve that have come from the government and water districts, ratepayers have cut their usage. They have installed high-efficiency toilets, shortened showers, and torn out landscaping. What is their reward for this added work and inconvenience?
They get to pay more to get less.
For some, this is a source of outrage. The district’s public trust level has dropped lower than the water in their reservoirs. It has created a set of conditions that can make any public meeting a potential shouting match.
So, what should you do to mitigate the problem? First, get out ahead of it by starting a public education program now. Providing more information that makes sense to the “man on the street” can help alleviate their anger when your rate increase goes public.
The worst approach would be do nothing and hope for the best. That’s the ostrich approach. Instead put together a ratepayer information program and get it started now.
The ideal program starts about 12 months before a rate increase is enacted. There is a very good possibility that you don’t have that much time.
Get your board on-board with the idea. Begin communicating with your ratepayers. Get started now. The difference in your next rate hearing could be dramatic.
Looking for guidance in crafting the right message for your ratepayers? Call Sentium Strategic Communications. We can help. Call (800) 595-1288 to arrange an appointment.
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