Texas utility’s rate changes reflect community concern about affordability

With valuable input from a citizens’ rate advisory committee and unanimous approval by the San Antonio City Council, San Antonio Water System (SAWS) plans to deliver on that priority with a new 2023 rate structure that went into effect in January. (Pictured right, SAWS citizens' rate advisory committee meets.)

“In the past, we’ve tended to look at affordability in connection with our lower-income customers, but this time around the rate advisory committee wanted to make sure everybody can afford the ‘essential use water’ needed to support their family and home,” said Mary Bailey, SAWS senior vice president of customer experience. 

SAWS conducts a rate study about every five years and has worked with an appointed rate advisory committee and a consultant during the past several studies. Under the new structure that went into effect in January, the fixed charge for residential customers will be reduced by up to 20% and an average residential customer will get an 8.7% decrease in their monthly water and wastewater bill.

“After seeing how people were so dramatically impacted by COVID, especially when the economy shut down and people were out of work, the discussion around affordability was more thoughtful,” Bailey added. “There was a news photo that went viral of about 10,000 cars lined up outside of a local food bank, and that resonated with the community. San Antonio has a fairly high poverty rate, and we now better understand how many families are truly just one event away from being in an emergency situation.”

Balancing other considerations

While focusing on affordable residential rates, SAWS is also maintaining its commitment to ensure that each rate class pays its fair share and that utility costs are recovered through revenue. A cost-of-service study indicated commercial users were not paying enough, so the new rates for business, industrial and multifamily community customers will increase an average of 7%.

“We had representatives from business interests and chambers of commerce on the rate advisory committee, and because they were informed about the cost-of-service analysis and understood the reasoning behind the new rate structure, they were able to say that it was equitable and give their support even though it meant their constituents would pay higher bills,” Bailey said. “I was so impressed with the committee’s ability to reach consensus. In the end, everyone could feel like they got some of what they wanted, and San Antonio is better off.” (Pictured left, SAWS headquarters building.)

In addition, the rate advisory committee identified water conservation as a very high priority and included a “strong price signal” of higher rates for discretionary usage, such as lawn irrigation. This is done through a tiered approach, with higher residential rates for water usage over 9,000 gallons per month.

“This is for water use that is not necessary to live but often drives the need for more water supplies,” Bailey said. “The least expensive way to make sure we have enough water to accommodate growth in our service area is to get people to use less water. We have seen significant reduction in household usage over the past 20 to 25 years as a result of our efforts to educate our residents about water efficiency.”  

New approach to affordability program

SAWS has also updated its affordability program for qualifying lower-income customers by switching from a rate discount approach based on income level to a lower fixed charge. There is no charge for the first 2,000 gallons of water used per month.

“What we found is that lower income doesn’t necessarily mean lower use because in some cases there are more people in a household or the infrastructure is older and less efficient,” Bailey said. “Overall, all customers in that program will see either a reduction or the same bill as before. This is pretty significant and very much supported by the rate advisory committee. Hopefully, this will really reduce delinquencies and allow us to keep more water services connected.”