OLR Report 2013-R-0218 summarizes the current rates that the Metropolitan District Commission (MDC) charges its customers and how they compare with Connecticut Water Company's (CWC) rates. It also explains (1) what makes water rates increase, (2) the role commission members and non-members have in rate-setting and the process of converting a non-member town to a voting member town on the MDC board, (3) whether the Public Utilities Regulatory Authority (PURA) (formerly known as the Department of Public Utility Control, or DPUC) controls these rates, (4) how the state regulates water companies, and (5) what other options Connecticut residents have for obtaining water.
The MDC water rates are generally lower than those of private water companies, such as CWC. The surcharge for non-member towns (NMT) served by the MDC, however, increased significantly in January 2013. According to MDC's assistant district counsel, numerous factors contributed to the increase, including a loss in revenue due to decreased water consumption that adversely affects NMTs, a necessary shift to a more stable source of revenue to cover fixed operating and maintenance costs, an aging water infrastructure system, and the fact that member towns already pay a special sewer service surcharge that is not imposed on non-members.
While member towns are represented on the commission and have voting rights to approve rate adjustments, NMTs have no such representation. However, NMT residents are able to attend public hearings and provide input during the budget and rate-setting process. The conversion of a NMT to a member town would require either an amendment to the special act that chartered the Metropolitan District, or approval from all of the member towns according to the procedures set forth in the charter.
PURA does not regulate the rates of municipal or regional water authorities such as the MDC. Rather, the rates are established through a change in the MDC ordinances, in accordance with the District's charter. PURA does regulate the rates of private, investor-owned water companies, including CWC. It may deny rate increase requests if the proposed rates fail to meet certain statutory criteria.
Connecticut residents may be somewhat limited in their water supply options. The water industry is a natural monopoly, so switching to a competitor may not be possible, and the ability to drill a well on one's property could be restricted by Department of Public Health (DPH) regulations. MDC customers in NMTs can, however, attend public hearings concerning the budget and water rates and voice their input, as rates are adjusted on an annual basis. Furthermore, customers can take advantage of energy efficiency options as suggested by the MDC, the Department of Energy and Environmental Protection (DEEP), and the U.S. Environmental Protection Agency (EPA), which could help to reduce an individual's water consumption.
For more information, read the full report.
http://www.cga.ct.gov/2013/rpt/2013-R-0218.htm
