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A Water Affordability Program for the City of Detroit

A comprehensive program to address water affordability in the city of Detroit, including rate affordability, arrearage management, and water conservation. It also includes basic consumer protections and innovative collection initiatives. Implemented by Roger D. Colton with Fisher, Sheehan & Colton Public Finance and General Economics in February 2005.

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A Water Affordability Program for the City of Detroit

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  1. A Water Affordability Programfor the City of Detroit Prepared by: Roger D. Colton Fisher, Sheehan & Colton Public Finance and General Economics Belmont, MA February 10, 2005

  2. Components of the Affordability Program • Rate affordability component: • Burden-based • Fixed credit • Arrearage management component • Water conservation component

  3. Cost Recover for Rate Affordability • Meters charge (not volumetric): • Bad debt offsets • Start-up expenses • Annual level of a meters charge: • Residential: $12 • Commercial: $240 • Industrial: $3,300 • Municipal/school/housing: $900

  4. Rate Affordability Expense Savings • “Going forward” bad debt savings • Reduction in working capital • Reduction in credit and collection • Rationalize credit and collection

  5. Impacts of affordability program:Columbia Gas • 61% fewer disputes • 53% fewer new payment plans • 69% fewer broken payment plans • 48% fewer shutoff notices • 74% fewer orders for disconnections for nonpayment

  6. Impacts of affordability program:National Fuel Gas • 30% increase in number of payments • 10% increase in percentage of bill paid • 80% decrease in number of disconnections

  7. Basic Consumer ProtectionsService disconnects for nonpayment • Waived late fees for low-income customers • Disconnect limitations: • Ban notice with no present intent to disconnect • Impose time limit on efficacy of notice • Limit number of notices not acted upon

  8. Basic Consumer ProtectionsPayment Plans for Arrears • Renegotiate payment plans with changed circumstances. • Reinstate payment plan after default if no disconnect. • Regular but not necessarily equal monthly payments. • Cap payment plan payment at one month’s average bill.

  9. Innovations in collections • Increased use of Electronic Funds Transfer (EFT) for ability-to-pay payment plans. • Landlord receiverships whether or not gas and/or electric vendors involved. • Cross-servicing residential accounts: city permits. • Cross-servicing non-residential accounts: license and permits.

  10. Summary of program proposal • Rate affordability program: • Rate affordability • Arrearage management • Water conservation • Fundamental consumer protections • Designated ability-to-pay collection initiatives

  11. For More Information http://www.fsconline.com (Library or News)

  12. For More Information roger@fsconline.com

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