Cost of water could rise as Board of Water supply seeks rate hike plan

Cost of water could rise as Board of Water supply seeks rate hike plan
Updated: Feb. 26, 2018 at 7:10 PM HST
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HONOLULU (HawaiiNewsNow) - The cost of water might soon be going up.

The Board of Water Supply is seeking a 12.5 percent revenue increase over five years to bring in roughly $271 million to deal with rising costs and to speed up the replacement of its aging pipes.

BWS officials said the increase doesn't directly translate to a rate hike for the different classes of its customers, including single-family, multi-family and non-residential.

"We're trying to figure out right now, how to generate 12.5% more revenue from the whole group, but how does it affect each customer in particular?" explained BWS manager Ernest Lau.

Other possible changes could impact the rates.

For example, single-family customers currently aren't paying the full cost of their service. The agency wants to lower that subsidy which is being covered by other ratepayers such as multi-family customers.

"The guidance was to try and move single-family, to try and eliminate that subsidy and move them closer to their cost of service while at the same time reducing the amount that multi-family pays," said David Ebersold, a consultant from CDM Smith.

The agency is also looking at establishing a new rate tier for residential customers to encourage conservation.

"We are looking at the possibility of creating an "essential needs" tier for all our residential customers that would give maybe the first 2,000 gallons at possibly even below cost of service for those customers," said Lau.

Funding for projects would come from a combination of rate hikes, bonds and state revolving funds, according to BWS officials.

"It's important to keep these transitions smooth so as not to have anyone experience big, dramatic swings in their rates in any given year," said Ebersold.

The agency plans to present draft models for 5-year rate increases to its board in March.

The earliest that a hike could take effect is July 2019.

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