Cleveland Water takes its responsibility to deliver a reliable supply of safe drinking water at an affordable price seriously. We have worked hard to identify ways to improve service levels and become more efficient. As we enter our next five year rate cycle, we are excited to announce this hard work—and our forward thinking approach to how we have invested in our system over the past 30 plus years – has put us in a position to not raise our rates for the next three years. Because of this, on October 19th, we will introduce an ordinance at Cleveland City Council that will have 0% rate increases in 2016, 2017 and 2018, and will have small increases in 2019 and 2020.
If this ordinance is approved by Cleveland City Council, beginning in 2016 and continuing through 2018, customers should not see any increases in their bills unless they change how much water they use. In 2019 and 2020, average residential users – customers who use about 2 MCF per quarter – may see their bills increase by between $1.30 and $2.60 per month depending on how far and high they live from Lake Erie. To help understand how unprecedented this is, we looked back several years, and found from 1993 to 2015, on average, rates went up about 7% per year. We are excited we have been able to minimize the impact on our customer’s pocketbooks, all while protecting the long term financial position of Cleveland Water so that future rate increases can be minimized as well.
This proposed rate schedule raises the natural question of “how did we do it?” The answer is through a combination of hard work and smart planning. The rate increases passed in 2011 provided the base necessary to better align our rates with our fixed costs, stabilize our customer service operations, effectively implement our AMR program, support the continuation of our capital program, and improve our operational efficiency. Without these rate increases, we would not be at the point we are today. Two projects in particular have been instrumental in achieving three years of 0% rate increases. The Customer Service Turnaround Project helped identify additional accounts that were not being billed, improved the consistency of our billing and call center operations, and helped implement a more effective collections process that stabilized our accounts receivables. But, perhaps, no project has been as important as our AMR project. The AMR technology is already paying huge dividends as we have seen our estimated bills dramatically decline and have been able to more accurately measure consumption, all while providing an expanded and improved level of service to our customers.
But, the hard work put in over the past 5 years is only part of the story. We have also taken an aggressive and forward thinking approach to capital investment. Over the past 30 years, we have invested more than $1.6 billion in our infrastructure. As a result, we have fully modernized our four interconnected water treatment plants, as well as the pumps, tanks and towers located throughout our system. As a result, we are not facing the same financial burden as many other water utilities across the country. This does not, however, mean we are done investing. Instead, we are shifting our focus to water mains buried underground that can break causing a great deal of customer inconvenience. Over the next nine years, we will invest more than $235 million in replacing these mains; all while maintaining reasonable water rates.
Just like our capital planning, we are not done trying to find ways to become more efficient while continuing to improve the service we provide customers. The proposed rate structure allows us to tackle new projects – such as expanded technology based customer service options and a transition to monthly billing – all designed to make it easier to do business with us.