Raleigh\u2019s underground water infrastructure, mainly pipes in the ground, needs more than $7 billion in repairs, according to City Public Utilities Director John Carman. These are not immediate costs, he said, but now is when Raleigh should be planning to replace pipes that will age out during the coming decades.<\/p>\n
Carman told the Record the current financial model for the system does not put away any money to pay for replacing pipes that have a lifespan of anywhere from 60 to 100 years.<\/p>\n
\u201cWe have $500 million worth of pipe that was installed before World War II,\u201d Carman said.<\/p>\n
He said that bonds and similar big loans are a good way to pay for large projects such as a new water treatment plant. But, Carman said, pipe replacement should be paid along the way directly from water bills.<\/p>\n
![\"\"](\"http:\/\/www.raleighpublicrecord.org\/wp-content\/uploads\/2011\/04\/Dempsey-E-Benton-Water-Plant-300x191.jpg\" "\\"Dempsey")
<\/a>The Dempsey E. Benton Water Treatment Plant. Although water rates cover operating costs, they do not cover maintenance costs for new underground pipes.<\/p><\/div>\n
Raleigh\u2019s water system is what\u2019s called an enterprise system, meaning it pays for itself. The catch is that most of the system\u2019s costs\u2014running treatment plans, fixing old pipes, making sure water always comes out of the tap\u2014are fixed. And most of the system\u2019s income goes up and down with water use.<\/p>\n
Peter Scott, co-chair of the WUTAT and a former Progress Energy executive, told city councilors last month that residents have done well with water conservation, with per capital consumption down 40 percent since 1987. But, Scott said, revenue \u201cmust increase significantly\u201d to cover the cost of the system.<\/p>\n
City Councilors created the WUTAT two years ago to study the city\u2019s water system and make recommendations on how to best manage the financial model of the utility.<\/p>\n
The tiered rate structure the city implemented last year, which charges more per gallon the more residential customers use, has been lowering water usage across the city, and that means less income for the utility.<\/p>\n
After questioning from councilors about how to best address the long-term revenue shortfalls, Scott said that when it comes to how much to charge water customers, \u201cthe more fixed, the better.\u201d<\/p>\n
That means more of the water bill should be made up with fees, not based on how many gallons a home or business uses.<\/p>\n
Carman said after the meeting that the \u201ccurrent financial model does a good job of fixing infrastructure above ground,\u201d such as pump stations, water treatment plants and the like.<\/p>\n
\u201cThe piece that\u2019s missing is the part fixing the below-ground infrastructure,\u201d he said.<\/p>\n
Councilor Thomas Crowder expressed frustration at the meeting last month with the water rates loop they find themselves in: \u201cRaise rates, lower consumption, raise rates again, lower consumption.\u201d<\/p>\n
Ninety percent of Raleigh\u2019s water costs are fixed, and about three quarters go up and down with usage, according to the WUTAT report.<\/p>\n
Scott told councilors that the main issue with the water system\u2019s financial model is that there are no reserves for droughts, repairs or other contingencies.<\/p>\n
City councilors already raised sewer rates last year and Scott said that action was \u201cmoving in the right direction, where we reflect the actual costs.\u201d<\/p>\n