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A Water Affordability Program for the City of Detroit

A Water Affordability Program for the City of Detroit. Prepared by : Roger D. Colton Fisher, Sheehan & Colton Public Finance and General Economics Belmont, MA February 10, 2005. Components of the Affordability Program. Rate affordability component: Burden-based Fixed credit

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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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