The Maryland Public Service Commission has ordered the water and sewer utility for the Washington suburbs to change its pricing system after upholding a judge’s ruling that the current rate structure discriminates against larger households.
The Washington Suburban Sanitary Commission, which serves nearly 2 million people in Montgomery and Prince George’s counties, has said changing its long-standing consumption-based rate structure would result in higher bills for most residential customers.
In a ruling Tuesday, the four members of the Public Service Commission upheld a utility-law judge’s finding in September that WSSC’s unusual pricing system is “unduly discriminatory” and “unreasonable” because it results in some customers paying more per gallon.
While many utilities charge based on the amount of water used, industry experts say WSSC is unique in charging the highest rate for the entire bill, back to the first drop. Other utilities charge higher rates only for the number of gallons in each higher-priced tier.
Beyond leading to higher per-gallon rates for larger households, critics say, the system can cause big jumps in water and sewer bills when a customer bumps up, even slightly, into a pricier tier.
“This is a complete victory for customers in WSSC’s service area who have been discriminated against by having to pay higher rates,” said Richard Boltuck, a Bethesda resident and retired economist who filed the complaint about the pricing system with the Public Service Commission in 2015.
As a two-person household, Boltuck said, he and his wife will probably face higher water bills as a result of his legal win, because people who use more water will no longer subsidize the lower rates that he and others in smaller households pay.
Even so, Boltuck said, “that’s what it means to end discrimination. It always generates winners and losers. The losers are the ones who have been benefiting from the discrimination, but we still eliminate it because it’s unfair.”
Under the current pricing structure, homes with three or more people can be charged nearly twice as much per 1,000 gallons as people who live alone, Boltuck said. A seven-person household, he said, can end up paying $1,314 more over a year for water than if those seven people each lived alone.
WSSC spokesman Chuck Brown said Wednesday that the utility is reviewing the Public Service Commission’s order and is “examining all options.”
Even as WSSC continued the legal fight, the utility, at the direction of the Montgomery and Prince George’s county councils, recently hired a consultant and formed a bi-county work group to study alternative rate structures. Any changes would have to be approved by both county councils and would take effect in the fiscal year beginning in July 2018.
The challenge, WSSC officials have said, is how to maintain a reliable revenue stream based on water usage. Like other U.S. water utilities, WSSC is trying to cover mounting costs, particularly to repair and replace its aging pipes and other infrastructure, as federally mandated water-saving toilets and other appliances eat into water consumption. Water consumption has generally held steady even as the population has grown, utility officials have said.
The Public Service Commission rejected WSSC’s appeal that the tiered rate structure, in place since 1978, encourages conservation. Commissioners said Chief Public Utility Law Judge Terry J. Romine ruled correctly that the utility had provided no studies to show that it actually led people to use less water.
The Public Service Commission also rejected WSSC’s argument that the commission didn’t have the authority to order a change in its pricing system. While the commission doesn’t regulate WSSC’s rates as it does for other utilities, such as electric and gas companies, it can decide whether WSSC’s rates are “reasonable” under state law, commissioners said.