The Seattle City Council is poised to approve a plan to increase the city’s combined water, sewage, solid waste and drainage rates for residents more than 20% by 2026.
The plan projects the monthly cost for a typical house would reach $275, up from $223 this year, and the monthly cost for a typical apartment would reach $155, up from $127. The monthly cost for a small store would rise about $200, to $1,319.
For many residents, every dollar matters. Still, Seattle Public Utilities, which provides the services and which developed the “strategic business plan” for 2021-26, says it would be proposing higher rate hikes were it not finding ways to trim spending and save money in various ways.
SPU’s previous six-year plan, for 2017-23, projected average annual increases of 5.2%, whereas its latest plan calls for increases of 4.2%, SPU general manager Mami Hara told the council’s utilities committee last month. The committee is set to vote on the new plan Wednesday.
“We’ve lowered our rate proposal considerably” while adding more customers to a program that provides a 50% discount to income-qualifying households, boosting enrollment from 25,000 to 30,000 since 2019, Hara said.
Water, sewage and solid waste are billed every other month, while drainage is paid through property taxes. Though SPU and Seattle City Light (which provides electricity) are part of city government, they’re run somewhat like independent entities, almost entirely funded by their ratepayers. SPU develops a new six-year plan every few years; the council cements the actual rates through legislation annually.
SPU says the average annual increases now under review are needed to cover a range of mounting expenses, including:
- Major capital projects that must be completed to comply with environmental mandates and policies, like a storm water treatment station in South Park and a $570 million storage tunnel for sewage and storm water that’s under construction along the Lake Washington Ship Canal.
- Maintenance work on SPU’s underground pipes, many of which are more than 80 years old.
- Sewage treatment rate hikes by King County. SPU contracts with the county for sewage treatment.
- Regular inflation, averaging 2.6% annually, and labor, health care and construction costs expected to increase at rates above regular inflation.
- Seattle utility taxes, which flow into the city’s general fund and which are expected to cost SPU about $123 million this year.
Many residents have struggled to pay their SPU bills since the pandemic slammed the city. SPU had 8,200 delinquent customer accounts with overdue amounts totaling about $7 million this March, up from 4,500 accounts and about $2.1 million in March 2020.
But $7 million isn’t much relative to SPU’s $1.4 billion budget, so delinquent accounts aren’t a major driver of the proposed rate hikes. The city has suspended customer shut-offs and interest charges during the COVID-19 crisis.
The pandemic has changed how people in Seattle use water and produce solid waste; water consumption last year rose 6% in single-family houses and dropped 12% in other buildings, and houses generated 15% more waste than in 2019, while other buildings yielded 22% less, according to SPU.
Those changes have cost SPU revenue, but like the customer debts, not much relative to other expenses.
The last time SPU unveiled a six-year plan, in 2017, a customer-review panel and some residents raised concerns about affordability and transparency.
They said the rate increases proposed then would be hard to bear in a city where rents and other costs were escalating. They also scrutinized $201 million in SPU work related to Move Seattle transportation projects, because most voters thought the $930 million levy approved in 2015 was going to cover all spending associated with those projects.
The customer-review panel, a volunteer group of residents and industry experts that advises City Hall, recommended changes to the 2017 plan, leading the council to slightly reduce the rate increases SPU had proposed.
This time around, the customer-review panel’s members are relatively pleased with SPU. The organization is spending thoughtfully and the sewage-tunnel project has been moving ahead on budget, they noted in a February letter to the council.
Sewage and storm water in older neighborhoods drain through the same pipes, and the mixture spills into the ship canal during storms. The tunnel will keep nearly 60 million gallons out of the waterway each year, helping Seattle satisfy a 2013 consent decree with the U.S. Environmental Protection Agency and Washington State Department of Ecology.
“We endorse the plan and support its adoption as presented,” the customer-review panel’s members wrote in their letter, adding, “SPU’s commitment to drive rates down is admirable and should continue to be a priority.”
To minimize its costs in recent years, SPU has secured federal and state funds for capital projects, including a $66 million boost for the tunnel project.
Following a 2017 recommendation by Councilmember Lisa Herbold and her colleagues, the organization also has begun budgeting differently. Rather than continue to assume projects will be accomplished 100% on schedule, which was rarely realistic, SPU adopted a 97.5% accomplishment metric, reducing the need for cash in the short term. Moving ahead, the organization intends to use an 85%-90% metric, which could save SPU $222 million between 2021 and 2026.
Meanwhile, SPU has saved money by keeping vacant jobs open and by coordinating maintenance work with other agencies, building up healthy cash reserves, according to a memo from the city’s budget director.
The customer-review panel does have some lingering concerns, noting that SPU has minimized the proposed rate hikes partly by planning to spend its newly acquired cash reserves and by kicking costs down the road.
The organization’s new budgeting assumptions make more sense, but delays on some projects will cost ratepayers in the long run, the panel asserted, describing SPU’s challenge as a balancing act.
The council’s utilities committee could try to reduce the proposed rate increases by lowering SPU’s project-accomplishment metric even more, or by reducing the utility taxes that the city charges the organization.
“Everybody has to pay these bills, which are by their nature regressive,” because less wealthy households spend more of their incomes on utilities, said Councilmember Alex Pedersen, who chairs the committee.
SPU compiled survey data, interviewed “several dozen” business owners and residents from underrepresented communities and deployed a short poll to “internal and external partners,” according to the customer-review panel.
Rather than mail postcards to let customers know about the potential rate hikes, as SPU did in 2017 at Herbold’s urging, the organization ran a digital and social media campaign that pointed people to a special website about its plan, spokesperson Sabrina Register said. The campaign included partnerships with media, including ethnic media, and generated 10,000 website views, Register said. The proposed rate increases weren’t prominently displayed on the website.
Pedersen’s committee held two remote meetings on the topic last month; zero residents called in to provide comment on the rate hikes.
In 2017, the council asked SPU to start billing developers for the right to connect their new buildings to the sewer and drainage system, like many other cities do. The customer-review panel had called SPU’s lack of such charges a missed opportunity amid a construction boom.
SPU studied the issue but declined to proceed after consulting with Mayor Jenny Durkan’s office. The charges “would have negative impacts on affordable housing in Seattle,” a spokesperson said.