Fairfax Focusing on City’s Proposed Water Rate Increase
By GEORGE BROMLEY
Falls Church Times Staff
April 28, 2011
Last Monday the Falls Church City Council deferred final approval of a water rate increase until June 27. The following day the Fairfax County Board of Supervisors authorized the Fairfax Consumer Protection Commission to undertake a comprehensive review of the City’s water rate making practices. The measure was introduced by Supervisor Linda Smyth (Providence). The Board’s action was preceded by two letters from Fairfax Water’s outside counsel Stuart Raphael to City Attorney John Foster, which suggested that higher rates would violate a judicial order and the City Charter.
“Needless to say, all of us who have residents who use Falls Church water are very much concerned,” said Ms. Smyth. “We would like to get our consumer product protection folks starting to look at this to see if it conforms to our principles of sound water rate making.” She added that the Commission also would review the City’s water rate making study, which was prepared by an outside consultant.
Specifically, Supervisor Smyth asked the Commission to determine the basis for Falls Church’s rates, whether the City was in compliance with the rate making principles established by the Board in May 2010, the nature, location, and cost of any capital improvements made over the past five years and how those improvements were funded, and the location and cost of projected improvements. She asked that the Commission report back to the Board by September 27.
Ms. Smyth’s motion was seconded by Supervisors Gerry Hyland (Mout Vernon) and Penny Gross (Mason), and then approved by voice vote.
Mr. Raphael’s letter of April 15 noted that the proposed rates include a 7.8% return on equity and questioned why this would not violate Judge R. Terrence Ney’s January 2010 decree and Section 13.09 of the Charter. Mr. Foster responded that the return on equity would remain in the water fund. However, Mr. Raphael rejected this view on April 23, maintaining that such a return could not be built into the rates and concluding that Fairfax Water was expecting to see a reduction in the City’s charges, rather than a sharp increase.
The City Council gave preliminary approval for the higher rates on March 28, calling for gradual increases over the next three years: $3.27 per 1,000 gallons in FY12, to $3.53 in FY 13, and to $3.82 in FY14. The current rate is $3.03, which has been in effect since 2005. Approximately 92% of the system’s customers reside in Fairfax County.
According to City Manager Wyatt Shields, the City’s Public Service Commission met on March 23 and recommended the Council authorize the increase. If approved at second reading, the new rate structure would take effect on July 1.
Video of Supervisor Smyth’s complete statement is available for viewing on the County’s website (click on the meeting link and go to 3:02:35). Fairfax Water’s letters to the City and Mr. Foster’s response are posted on the utility’s website.
By George Bromley
April 28, 2011