The MDC District Board overwhelmingly approved  “Economic Development Rates” in the form of high-volume discounts for both water and Clean Water Project (CWP) rates at its Match 2, 2020 meeting.  As proposed, the only MDC customer who qualifies for discounts is Niagara Bottling of Bloomfield.  Four District Board Commissioners voted against the ordinance changes:  Lester (of Bloomfield), Ionno (of Hartford), Magnum (of West Hartford), and Avedisian (of Windsor). 
 
The MDC conducted a Public Hearing on these discounts a week earlier on February 24.   As reported by the Bloomfield Messenger, (“MDC Discounts Meeting Packed,” February 28, 2020), it was standing-room only and local news media estimated approximately 100 people attended.  Virtually everyone who spoke at the hearing was opposed to the discounts; only three individuals, representing Hartford-based organizations, spoke in favor.  All public comments (spoken and written) that were submitted for the hearing are now available on the MDC’s website: 
https://themdc.org/assets/uploads/files/2020%20Minutes/M%20-%20PH%20-MDC%20Government%2002_24_2020.pdf
There were 271 total comments, 3 in favor of the discounts, 268 opposed to the discounts.
 
The MDC’s rationale for offering the discounts was that if Niagara increases its water usage, then the MDC might be able to lower water rates for all customers.  Using the most recent data provided by the MDC, under the scenario of maximal Niagara water use, the average residential customer might see their water bill drop by 67 cents/month ($7.92/ yr).  However, the 90,000 MDC customers with MDC sewer who also pay the CWP rate might each ultimately need to contribute up to $24/yr more to offset Niagara’s $2.2 million discount on the CWP rate.  The total value of both discounts for Niagara could reach $2.6 million/yr. 
 
Opponents of the discounts argued that a large corporation shouldn’t get discounts while residents pay more.  David Silverstone, the MDC Independent Consumer Advocate, submitted remarks stating that Niagara was already steadily increasing water consumption and that current data suggests the discounts are an ill-advised bet that will hurt, not help, the MDC’s finances.
 
Save Our Water CT held a press conference and rally outside MDC headquarters prior to the Board’s vote on the discounts.  State Senators Derek Slap and Saud Anwar, State Representative Bobby Gibson, and local social & environmental justice advocates Dr. Mark Mitchell and Alex Rodriguez made statements to the news media opposing the discounts.  Senator Slap is currently working with other legislators on a bill that would increase regulatory oversight of the MDC.

See the March 2, 2020 Hartford Courant coverage by Josh Kovner (“Lawmakers want more control over MDC”www.courant.com/news/connecticut/hc-news-mdc-niagara-water-discount-20200303-4tnl3ibl35bnlmcaxlutmfzig4-story.html?fbclid=IwAR1eLm74CJDx-sDyrNr3qNOx6anjozvb1O4hKU-Nh2VQk7K0Xy72e56T6oY ).

Save Our Water CT is disappointed that despite overwhelming public opposition at its public hearing, the MDC District Board voted tonight for high-volume discounts that will benefit one customer - Niagara Bottling of California. As pointed out by David Silverstone, the MDC Independent Consumer Advocate, the financial rationale presented by the MDC to justify the discounts is not supported by the available data.

The two discounts, one for water and one for the Clean Water Project Charge, could result in the forfeit of up to $2.6 Million per year in MDC revenues, money that could be used to reduce residents’ water rates or fund water assistance programs. The MDC’s goal of subsidizing this already-established and expanding business, which profits from MDC’s Class A water, is ill-advised and environmentally unsound.
We suggest that the MDC staff and the District Board look at other ways to address MDC’s revenue challenges and consider alternative rate structures that will stabilize the costs of essential household water use, benefit residents first, and insure equitable incentives for businesses of all sizes and varieties.
 

Save Our Water CT opposes the proposed MDC combined water and Clean Water Project Charge discounts being offered to large corporate super-users.
 
The MDC faces real financial challenges from problems decades in the making: repairs needed for aging water and sewer infrastructure, a consent decree to clean up sewage overflows into the CT River, and an overall decrease in water consumption. For resident ratepayers, especially low-income families, increasing water rates are challenging budgets and forcing families to choose between water and other essential needs.
 
Creating a corporate discount, which applies to one super user- Niagara Bottling of California- is not the solution to challenges faced by the MDC or its low-income customers.

• Let’s be clear:  the discounts proposed add up to an overall 50%: a 20% discount for the water use and 75% for the Clean Water Project Charge (CWPC) for all water use over 600,000 gallons/day on a monthly average. The MDC does not like mentioning the huge CWPC discount, but that’s where “the real money is” for a water bottling corporation. Residents will pay $3.97/ccf for water and $4.10/ccf for the CWPC for a total of $8.07/ccf. Once Niagara hits the discounts, it will pay $3.18/ccf for water and $1.025/ccf for CWPC for a total of $4.205/ccf.
• The MDC is assuring its customers that these discounts will result in a drop in water rates of 11 cents/ccf.  This will happen if (and only if) Niagara uses their full 1.8 M gallons of water/day.  But the MDC is not telling us what the drop in rates would be if Niagara PAID FULL PRICE. These discounts could amount to as much as a $2.2 Million/yr corporate give-away to one environmentally unsound customer. And the Independent Consumer Advocate’s financial analysis indicates that the discount could actually lose MDC money.
• The issue of these corporate discounts is not an “environmental vs. an economic or social justice issue” as the MDC has tried to represent.  Niagara, a privately held, profitable corporation has already expanded without the benefit of discounts and should pay its full and fair share.  Those additional revenues could result in an even larger drop in residential rates- rather than enriching a private corporation. Furthermore, the MDC needs to consider a rate structure which provides for a basic household rate for essential needs, requiring those using high amounts of water to pay more. Access to clean affordable water is a social justice issue.
  
• The environment is a concern for all regardless of income or neighborhood. Plastic production emits pollutants into the air around low-income neighborhoods.  Diesel fumes cause spikes in asthma along truck routes. Plastic micro-particles are now entering our bodies as well as our rivers and oceans. It’s up to us all to protect our shared environment

"The Independent Consumer Advocate(ICA) submits this statement in opposition to the proposed Economic Development Rate (EDR) which is the subject of the public hearing of February 24, 2020. All of the evidence currently available demonstrates that the EDR will not produce additional revenue for the MDC.  In fact, based on the evidence available, the EDR will reduce revenue from the only customer in any position to take advantage of this rate and as a result, increase the revenue which must be raised from other customers.

The ICA agrees that a major driver of the 2020 water rate increase is the decrease in sales.  It articulated the reasons for this decrease in its December, 2019 statement regarding the proposed rates for 2020.  Further, the ICA supports measures, including rate design, which encourages the prudent use of additional water by existing and new customers which increases water revenue.  The current proposal, however, risks existing revenue and if anything, is likely to exacerbate the conditions which led to the 2020 water rate increase.

The current proposal establishes a threshold for a discount at 600,000 gallons a day or 802ccf.  This is an increase from the original proposal set by the Revenue Committee of 500,000 gallons a day.  (The ICA submitted a statement regarding the original proposal indicating that it put over $200,000 of revenue at risk based on consumption in the first 11 months of 2019. Shortly thereafter, this new proposal was submitted to the Public Works Committee). Based on the revised numbers, and with consumption through January 2020 now available, this new proposal puts at risk approximately $115,000 of revenue.  That is, if 2020 consumption mirrors 2019 consumption, MDC will collect $115,000 LESS revenue than it did in 2019, further exacerbating the revenue shortfall.

There is only one customer who comes anywhere close to, or exceeds, the 600,000 gallon threshold.  In 2019, that customer exceeded the threshold in 6 of the 12 months of 2019.  Importantly, for the last 8 months for which data is available (through January 2020), this customer exceeded the threshold in 7 of those months.  Given that the discount for consumption above the threshold amounts to approximately 50% (water rate discount of 20% and Clean Water Project Charge discount of 75% produces a weighted average of approximately 50%.), the MDC will lose $115,000 in revenue if 2020 consumption mirrors 2019.

There seems to be some belief that by giving this discount and putting over $100,000 of revenue at risk, consumption will increase sufficiently to offset this revenue loss and in fact add additional revenue.  The ‘bet’ is that if MDC gives up $100,000, it will get this much back and more by enacting this rate proposal.  The data indicates that this ‘bet’ is ill advised.

The customer eligible for the discount has been steadily increasing its consumption, without any discount.  In January 2020, for example, it increased its consumption by approximately 50% over its January 2019 consumption—711,000 gallons a day in 2020 as compared to 475,000 gallons a day in 2019.  Given that there appears to be some seasonality in consumption by this customer (based on 2019 data), it makes sense, before betting $115,000, to at least get data from the summer months in 2020 to determine if this level of  increase in consumption continues without the discount.  For example, if there were an increase in August consumption comparable to the 50% increase in January, the result would be an average consumption of over 1.3 million gallons a day—about the capacity of the currently installed production equipment. 

The data that currently exists strongly indicates that this customer’s consumption of water is not price sensitive.  That is, its consumption is not based on price.  Of course, this doesn’t mean that other customers are not price sensitive and that there are not rate designs that could encourage prudent, increased water consumption.  The data simply indicates that for this customer, price does not appear to affect how much water it uses.

Before betting $100,000 of revenue that will have to be made up by other customers, the MDC needs some data, some evidence, that the bet will prove worthwhile.  The available data for the current proposal indicates just the opposite.  The MDC should reject the proposal at this time."
 
Respectfully Submitted
 
David Silverstone
Independent Consumer Advocate

1. Reality of Drought Regulations: Last week (2-3-2020), the M.D.C.'s C.E.O. tried multiple times to sidestep a question of mandatory reduction in Niagara water use during drought. MDC could TALK with Niagara and could PLAN for shutdowns, but it has no authority to prioritize water use during drought triggers. MDC’s own Water Supply Plan indicates that mandatory industrial limits would not occur until its reservoirs are at 10%!  So, while residents will be asked to conserve, lawn watering will be prohibited, and municipal use curtailed, bottles will be leaving the watershed and the state. If the MDC is SO sure that there will NEVER be drought restrictions, why did it furiously lobby against sensible state regulations state regulations to require a renewable permit based on safe yield and to limit water bottling once residential restrictions went into effect? In CT, all water transfers of more than 250,000 gallons/day of water out of watersheds in pipes require permits- but not those done by trucks!

2.  Realities of the Rate Discounts: The M.D.C.'s C.E.O represented- at last week’s board meeting and in the press -that an increase of Niagara’s water use to its max of 1.8M gallons/day would result in a water rate decrease of 10 cents per ccf to all customers & therefore, be a very good deal. It assumes that Niagara’s water usage would increase 1.2M gallons/day or 1604 ccf/day (1 ccf = 748 gallons) for 363 days/yr.

If Niagara were to increase its water use by THAT much (1604 ccf/day for 363 days = 582,354 ccf/yr), here’s what MDC revenue would be WITHOUT DISCOUNTS:

• 1,200,000 gallons/day= 1604 ccf/day for 363 days of operation =582,354 ccf/yr
• Water at $3.97/ccf + CWPC at $4.10/ccf= $8.07/ccf * 582,354ccf/yr = $4,699,697 or nearly $4.7M/yr

 
If MDC offers Niagara BOTH a 20% water rate discounts and a 75% CWPC discount (based on sending out 75% of its water in bottles and only ~25% into the sewer), here are the figures:

• 1,200,000 gallons/day=1604 ccf/day for 363 days of operation = 582,354 ccf/yr
• Water at $3.18/ccf + CWPC at $1.025/ccf =$4.205/ccf * 582,354ccf/yr  = $2,448,798 or nearly 2.5M/yr

The corporate “give=away” to Niagara could be $2,250,899 or $2.25 Million PER YEAR! This to a corporation that permitted its 3rd line in Oct. 2018 and already runs it profitably without discounts. There has been no application for a 4th bottling line.

And, if there is NO increase of water use and discounts are given for water over 600,000gallons/day, MDC could stand to lose $116,000/year ($116,000 - $23,000 from water, $93,000 from CWPC).

The additional income MDC is expecting from ordinance changes for their one super-user are at best speculative.  These discounts, narrowly constructed for just one industry, are not economic development rates and are not the solution to long term rate increases.  They will not offset the ever-increasing bills MDC’s projects into 2060.  Revenue generated by the sale of Class A water to bottlers should be fully used to subsidize residential rates or water assistance programs, not corporate profits.

In response to rapid and growing public protest, the findings of the Independent MDC Consumer Advocate, and questions as to whether the structure of the proposed discounts violated the MDC's charter, the MDC board issued a press release on 11-16-2018 notifying the public of their intent to withdraw proposed ordinance changes prior to their scheduled November 19th Public Hearing.

Protestors still gathered outside the MC headquarters at 555 Main Street, Hartford prior to the hearing, chanting and displaying "No More Groundhog Days" posters- a reference to how the discounts "popped back up " just as Niagara Bottling applied for permits to expand the number of its bottling lines. The hearing room was packed to overflowing due to multiple citizen concerns:  the discounts, the marked increase in water and ad valorem rates, concern for the availability of water to low-income residents, the need to continue the mandated cleanup of the 800 million gallons of MDC sewage which spill into the CT River each year during large rainstorm events, and more.

Of concern-and noted in the press release- are plans for the MDC to seek charter changes at the upcoming legislative session which would allow it to develop what is being labelled an "Economic Development Rate" similar to that in place at South Central Regional Water Authority. Though the SCRWA economic rate is time-limited, it is once again keyed to large water users.  The entire question of whether the MDC should be involved in "economic development" remains very controversial- and is never mentioned in its charter. Stay tuned.

Attorney David Silverstone, the Independent MDC Consumer Advocate, examined multiple aspects of the proposed 2019 MDC budget. Of special note were his findings on the proposed "Economic Development Rate, which he deems : "especially problematic" :

"The proposed Economic Development Rate would give a 20% discount on all water consumption over 600,000 gallons per day. There is no cost justification for such a discount. Second and perhaps more importantly, for these largest customers the clean water project charge (also known as the special sewer service charge} would no longer be based on water consumption for water in excess of this 600,000 gallon threshold, but rather would be based on sewer flow associated with the excess over 600,000. The fundamental principle of linking the clean water project charge to water consumption would therefore be broken. This approach favors water customers who discharge less into the sewers than water used. This approach favors customers like water bottling plants, golf courses and the like.

The MDC should not be picking which types of customers get better rates for service. It should be providing service to all customers on an equitable basis. This treatment is simply not equitable. For example, a condominium association approached the MDC in the last several months and argued that it should not have to pay the clean water project charge on the water it used for irrigation.  It meters this irrigation water separately from domestic consumption and the irrigation water was not discharged to the sewer. The argument was rejected on the grounds that all metered water is subject to the clean water project charge, whether it goes into the sewer or not. Under this proposed economic development rate, this principle is clearly violated. discount

The magnitude of this change in how the clean water project charge is calculated will vary depending on the tpe of customer. It could be substantial and in all likelihood will be far in excess of a 20% discount. For example, if a customer only discharges 30% of purchased water to the sewer, the customer would be getting a discount of 70% off the clean water project charge for water usage in excess of the 600,000 gallons/day."

OF NOTE: Niagara Bottling of California is the only MDC customer currently approaching this 600,000 gallons/day and discharges approximately only 20% of the water it uses into the sewers.  Most leaves in millions of bottles a day loaded onto semi trucks and leaving the watershed.

See his full analysis in the document below.

On Tuesday November 13, 2018 the Bloomfield Town Council unanimously adopted a resolution instructing its MDC Commissioner to vote against the proposed ordinances which would provide a 20% water rate discount and a potentially 80-90% Clean Water Project Charge discount to large water users  for volumes of water that exceed 600,000 gallons/day measured through a single meter.

"NOW, THEREFORE, BE IT RESOLVED, that the Town of Bloomfield hereby states its opposition to any discounting or reduced rate schemes for large volume users of our water..."

Multiple residents spoke before a packed town hall to voice opposition to what they perceive as a repeated attempt by the MDC to offer discounted rates for Niagara Bottling in return for increased water usage. Similar discounts were rescinded after a public outcry two years ago.

"What don't you understand about the word 'NO'?" asked one resident.

The proposed discounts have reappeared just as Niagara filed permits with the Town of Bloomfield to expand the number of bottling lines and just as a larger water main necessary for the increased water draw is nearing installation.

The discounts are the antithesis of a water conservation ethic and viewed by many as a very specific corporate giveaway.  What other industry uses massive amounts of water through a single meter? And  since much of the water is shipped away in bottles, up to 80% will not be discharged to the sewers. That will result in a Clean Water Project Charge discount of up to 80%. No other category of MDC consumer is treated in this way.

See the full text of the resolution below.

IN 2015 the MDC GAVE NIAGARA BOTTLING A BACKROOM SWEETHEART DEAL. IN 2016 AFTER A PUBLIC OUTCRY, THEY RESCINDED THE DISCOUNTS…. NOW THEY COULD BE COMING BACK….

MDC’S PROPOSAL FOR A SPECIAL ‘ECONOMIC DEVELOPMENT RATE’? Those using over 600,000 gallons/day through a single meter will get a 20% discount on the excess. Their Clean Water Project charge also will be discounted- potentially by 80 or 90%.  The Clean Water Project Charges, which exceed the actual water rate, are billed to all MDC residential customers who use MDC sewer services. They fund the EPA mandated Clean Water Project, slated to clean up wastewater overflow from the MDC's system. For everyone except the massive water users, the charge is based on the amount of water used. But for the super-users, they would get huge discounts by having only their actual wastewater measured. Residents who water their lawns, farmers who irrigate their crops, golf courses- all whose water goes back into the ground rather than the sewers, get no such break.  BUT, bottling companies who export water out of the watershed in bottles and trucks, would be HUGE winners.

Of note, the rate cut is designed to exclude the purchase of treated water by other municipalities. So, large water sales to other CT Municipalities in need of drinking water, even if they exceed 600,000 gallons/day,   would not be eligible.  The most likely beneficiaries:  large bottling companies. Who else uses such quantities of water through a single meter and transports water away from sewers.
 
Meanwhile:

• Resident ratepayers will pay more for their water than corporate super-users
• Residents will continue to pay the full Clean Water Project Charge to fund the cleanup of overflow from MDC sewers that pollutes our streams, rivers, and Long Island Sound
• Residents will be advised to conserve water while the MDC promotes massive water sales to big business
• When the next drought occurs, residents will be asked to conserve while water bottling is allowed to continue until reservoir levels are dangerously low

Attorney David Silverstone, the independent MDC Consumer Advocate, has published an initial analysis (see the previous blog post) which questions why no cost analysis has been done and notes that the special treatment for the Clean Water Project Charge will likely be unfavorable to all other customers.

Members of Save Our Water CT are opposed to large volume discounts, which are in direct opposition to the conservation ethic promoted by the State Water Plan and most water utilities. They also object to  the  discounted CWPCs. MDC consumers have paid for years, in their water charges and property taxes, for their water infrastructure.  To exempt one large corporation such as Niagara Bottling of California, from paying its fair share points  to an unnecessary corporate giveaway. As the only state in the country to have Class A drinking water which has never mingled with waster water, why is there ANY need to discount this public resource?