Sewage Rate Hike Needed? Here’s the Math Behind It

The Orange County Sanitation District’s sewers and regional sewage treatment plant facilities are vital to the well-being of everyone. They provide reliable service for our homes and businesses, to protect public health and to preserve the ocean environment.

During the next 20 years, the Sanitation District will spend $2.4 billion to rehabilitate, upgrade and add sewage pipes, pumps, systems and facilities, all the while maintaining our two treatment plants, which cover more than 100 acres. These are sprawling, complex facilities that demand the attention of engineers, technicians, mechanics, operators, warehouse staff, laboratory staff, computer technicians and other support staff.

Most people do not think about what happens after their toilets flush. When they do, it usually means that the district isn’t doing its job. Sewer pipes and our two sewage treatment plants should be invisible to most folks. But as you can probably imagine, without them working reliably 24 hours a day, the quality of life and the environment around us would be much different. Systems wear out. And as they do, we must maintain them during their useful life and replace them. There are half a million minutes in a year. During each of them, our facilities are operating. We monitor them to make sure things are OK. We employ stand-by pumps and systems that activate the minute there is a problem. And our staff repairs equipment as it ages. They also stand ready for emergency repairs if necessary.

It costs money to keep our systems going. Next year we will spend $12 million to treat the sewage, control the odors, disinfect the effluent and condition the waste products that are trucked to agricultural sites in California and Arizona at a cost of $10 million per year. We generate most of our own power using methane gas that is produced during the sewage treatment process. That saves us having to buy electricity, but producing the power requires large generators that must be maintained and operated. And, of course, the sewage treatment processes themselves require round-the-clock attention by our staff. All told, our operating costs next year will be $77 million.

We are doing more this year than in past years. Last year we began disinfecting our effluent, began the move to full secondary treatment and committed to co-funding the nation’s largest water reclamation plant with our partners in the Orange County Water District. Two years ago we began studying new ways to manage our waste products. Three years ago we began to treat urban runoff. These programs signal increased operating costs and increased construction costs.

Some people have criticized our reserves as excessive. They suggest that we spend them first. That wouldn’t be prudent. Our reserve policy is regularly amended by our board of directors with an eye toward accomplishing several things. It provides construction reserves for the work ahead, emergency reserves for earthquakes and other unanticipated events, and interest income that can be used to reduce rates. It also gives Wall Street reason to assign us an excellent credit rating that translates to lower interest rates. That’s important because we will borrow $1.6 billion in the next decade.

We also need operating reserves to cover our cash flow demands during the six-month dry-period cycle because our fees are collected as a line item on our customers’ property tax statements. Many other agencies resort to short-term borrowing to cover this period. We don’t have to, which saves money for our ratepayers.

The board recently approved a new rate that will push the average bill for a single-family home from $87.50 per year to $100 per year. That’s a $12.50 increase, or little more than a dollar a month. By 2008, with annual reevaluation by our board, sewer fees may increase to $175 per year or $14.58 per month, double today’s rates.

How does that compare with other agencies like ours? Nationwide, according to a 2002 survey by the Assn. of Metropolitan Sewerage Agencies, the average rate was $244 per year. I will leave it up to you to decide whether our rate compares favorably with that figure. For more information on sewer fee increases, go to www.ocsd.com.