Title
Resolution to Revise the City of Ann Arbor's Water Rate Structure Adopted in July 2018
Body
Whereas, On June 18, 2018, Ann Arbor City Council adopted on a contested (7-4) vote a proposal from city staff that significantly re-structured Ann Arbor's water rates effective July 1, 2018 including (1) establishing a new multi-family customer class (2) adding a fourth volume-based tier to single-family residential rates and (3) eliminating the tier structure in the commercial customer class; and
Whereas, The effects of the re-structuring were to shift approximately $2M annually in cost from multi-family customers to single-family residential customers and to substantially increase the cost penalties charged to higher volume single-family residential water users including customers with large families; and
Whereas, Prior to the July 2018 re-structuring, the City had three volume-based residential pricing tiers where the highest (Tier 3) rate was $5.89 per CCF (1 CCF = 748 gallons) or 3.8 times the lowest (Tier 1) rate of $1.55 per CCF and residential customers understood and generally accepted the range and rationale for it; and
Whereas, The July 2018 re-structuring dramatically increased - more than doubled - both the top residential volume-based rate as well as the range of residential rates from low to high. The new Tier 4 rate of $14.08 per CCF is 2.4 times the previous highest rate ($5.89 per CCF in Tier 3) and the range of rates is now almost 8 times (low of $1.77 per CCF to high of $14.08 per CCF) - compared with the previous range of 3.8 times: and
Whereas, A fundamental premise underlying the re-structuring proposal was that volume peaking drives costs, yet the re-structuring proposal was internally inconsistent in its application of that logic - the re-structuring expanded volume-based price tiering for single-family residential, but eliminated the tiers in the commercial customer class where the peaking impact on the system (on both a percentage an...
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