Nutter Noncommittal On City Council Plan To Change Way Water Rates Are Set
By Mike Dunn
PHILADELPHIA (CBS) -- Mayor Michael Nutter says he's not yet sure whether he'll sign off on a City Council plan to change the way water rates are set in Philadelphia.
City Council closed its 2013 session with final approval of a bill that would create a new, five-member board to decide water rates. Its the brainchild of Council President Darrell Clarke, who has never liked the current method -- in which the Water Commissioner himself decides:
"We have a really good Water Commissioner. But the notion that the Water Commissioner can ask for an increase, and has the opportunity to approve his own increase didn't make a lot of sense to us."
The authors of the city charter established the current method on the theory that it would keep politics out of water rate decisions. But voters in November 2012 approved a charter change to allow the creation of a rate-setting board, and Clarke says the specifics have now been worked out:
"The mayor and the council will establish members that have to (meet) certain criteria, and must have knowledge about financing, some knowledge about water. We're going to have consumer advocates as a part of that board."
The plan now goes to Mayor Nutter, who says he needs time to study amendments authored by Clarke before deciding whether to sign the bill. In general, though, Nutter believes the current method is not broken:
"The system has worked in the past. We have some of the best water quality of any city in the United States of America, as well as a very high credit rating. So we'll see."
And Nutter is concerned that the change Council proposes could cause worries on Wall Street, potentially driving up the price of the Department's borrowing for capital needs:
"Another serious consideration here is just how the Water Department's credit rating is potentially affected in terms of bond rating agencies, cost of borrowing and the like."
But Clarke says the latest amendments include changes to make Wall Street more comfortable, including establishing a minimum cash reserve:
"We've got a number that works for all parties, and ensuring that we have a Water Department that's safe and secure as it relates to our bond ratings in the city of Philadelphia."
More to come on all this in 2014, but Clarke believes that the creation of a rate-setting board will, at the very least, prompt the Department to think outside the box when it needs new sources of cash:
"We want to make sure that the Water Department starts to get a little more creative in terms of alternative ways of raising revenue, not just raising rates for rate payers."
