This story was updated at 4:40 p.m. Nov. 1, 2022, to include comments from County Council Member Tom Hucker.
The County Council agreed Tuesday on recommending that the region’s water utility be allowed to raise its rates by up to 7% for fiscal year 2024 — which would increase the average homeowner’s quarterly bill by roughly $18 per quarter.
The Washington Suburban Sanitary Commission (WSSC) had recommended an 8% increase for fiscal year 2024, arguing that any increase less than that amount could result in significant cuts to its operating budget and capital projects and that a lower increase could eventually impact the utility’s bond rating with the three major credit rating agencies based in New York.
Lawmakers in Montgomery and Prince George’s counties each must agree on a recommendation for a maximum water rate increase; otherwise, the WSSC’s recommended rate increase is adopted, according to county and state law. Keith Levchenko, a council staff member, told the council that the Prince George’s County Council recommended a 7% increase last week.
Council Member Tom Hucker — chair of the council’s Transportation and Environment committee, which previously deliberated on the rate increase — said the council’s decision is not technically final because WSSC still needs to hold a public hearing in January and both counties must work through their own upcoming budgets, to see whether they can budget a 7% increase.
But the unanimous council vote is “a friendly but strong suggestion” that the WSSC doesn’t increase its water rates above 7% for the next fiscal year, Hucker said.
WSSC officials said reducing the commission’s proposed water rate increase to 7% would require either up to a $7.4 million reduction to the agency’s operating budget, or $190.2 million in reductions or deferrals to capital projects, according to council staff reports.
Joe Beach, WSSC’s deputy general manager, said in an interview that the 7% increase was not “ideal,” but that the commission is prepared to budget within the council’s decision, including in the long-term.
“I think as long as we get reasonable rate increases, we have a very sound long-term financial plan and I’ll think we’ll definitely be able to maintain our AAA bond rating and move out of the negative outlook that we have with Fitch [Ratings] right now,” Beach said.
Beach added that WSSC made $110 million in reductions in fiscal year 2023 to capital projects, which means the commission shouldn’t have to make any cuts this year. Construction of the Piscataway Bioenergy Project — a $271 million facility in Accokeek that will handle waste from five water resource recovery facilities and is the most high-tech project ever constructed by WSSC — is still on schedule, he added.
Last year, the County Council agreed with the Prince George’s County Council to set the water rate increases at 6.5% after WSSC had requested a 9% increase. Montgomery County officials had said 9% was too much of an increase for residents who were struggling to pay for expenses in the aftermath of the coronavirus pandemic.
At that time, WSSC officials said that the higher increase was needed because the commission was not able to raise rates during the coronavirus pandemic and had not received any federal or state aid during the pandemic.
Hucker said in an interview Tuesday that the 7% increase is fair, given the aftermath of the coronavirus pandemic and inflationary pressures on the commission. But he added that its next general manager, which will be named in the coming months once Carla Reid’s contract expires at the end of 2022, should try and find some long-term cost-savings.
That could be in trying to make contracts more competitive when it comes to putting out projects to bid, Hucker said.
“If I were general manager, that’s where I would start looking for savings,” he said.