Paying the water bill

James Moncur, as a water resources researcher and economics professor at the University of Hawaii, still takes an academic interest in what’s going on at the Honolulu Board of Water Supply, although now he’s following things remotely. He’s retired and moved to Phoenix, a desert city that has different issues with water than Oahu.

But he’s been away for four years and insulated from changes that have upset a lot of the water utility’s ratepayers, many of whom have taken issue with the bottom line of their water bill. In 2011, the board approved a five-year rate schedule; at the end of those five years, customers will be paying 70 percent more than at the start.

Last week, officials from the water board underscored that its rates are justified and that customer service is greatly improved (see Page E5). However, the city auditor and members of the Honolulu City Council countered that there is much more work to do on those scores.

Among the tasks on the horizon for the board: a study, due next year, on ways to improve the flawed automated meter reading (AMR) system, and a follow-up report to the auditor and Council on how it justifies its current, elevated rate charged to customers.

From his distant perspective, Moncur said he’s surprised by this turn of events.

"That’s quite a reversal for an agency that for years seemingly could do no wrong, at least when it comes to engineering and hydrology," Moncur said, adding that the primary problem now is communications.

"There’s a certain amount of public relations they need to pay attention to," he said. "The billing process needs to be clear."

That seems to be the primary mission ahead for Ernest Lau, manager and chief engineer at the Board of Water Supply. He took that post in February 2012, inheriting myriad problems.

A few months earlier, the board had approved a rate increase aimed at financing upgrades to an aging network of corroded pipes.

There was already a contract for the new system for sending the combined water and sewer bills, now a monthly occurrence, and a new service charge. These were implemented with no small difficulty, and went over budget.

There are also continuing problems with the troubled automated meter reading system that was meant to be a labor saver but has driven up overtime bills to compensate for its shortcomings.

Most recently, there was the conclusion of Honolulu City Auditor Edwin Young. Last week Young told the City Council he could not fathom the way the board’s consultant calculated the rate increase approved three years ago.

Lau said he would have the consultant meet with Young and Council members to clarify the process. But Young said the fact it’s hard to understand the justification for the rates is "the core of the problem.

"If the Board of Water Supply itself cannot justify their rates and their billings and are dependent on a consultant to explain everything, on what basis are they accepting their consultant’s creating this 70 percent increase for water rates and 45 percent for billing charges?" Young asked the Council Executive Matters and Legal Affairs Committee. "If they cannot answer the questions and they have to rely on the consultant, then there is a problem."

In addition to more clearly explaining its calculations to customers, the auditor made various recommendations, including:

» The development of a formal public involvement plan for future rate increases to improve on communication.

» Improving the performance of the automated meter system, which would reduce the cost of returning to a site to do manual reads.

» Evaluating whether it would be possible to offer "alternative water rates to low-income households, senior citizens and other disadvantaged groups.

The auditor was ambivalent about various proposals that have been floated by the Council about changing the governance of the board, by giving the Council direct oversight. Council Chairman Ernie Martin observed at the committee meeting that the BWS has more autonomy than, for example, the Honolulu Authority for Rapid Transportation, which must come to the Council for bonding authority.

There were other changes that were made to operations that caused public consternation, including new monthly billings that came along with a new monthly service charge. That fee — meant to cover some of the costs of the billing system itself as well as various maintenance and metering replacement expenses — started at $7.70 and is now up to $8.54 per bill.

The residential rate itself now starts at $4.03 per 1,000 gallons for the first 13,000 gallons. That unit price rises to $4.86 for usage up to 30,000 gallons, and then $7.24 for anything beyond that. The idea, Lau said, is to incentivize water conservation.

Above all, however, public complaints have demanded a way to understand the basis of what they’ve been charged — some of them retroactive charges to correct previous estimated bills.

Customer calls flooded in when the new billing system was launched in January 2013, and the call center seemed unable to handle them.

A Council resolution was introduced — it’s still on hold — calling for a City Charter amendment to restrict retroactive billing. A hearing on that measure last October drew many general comments from customers like JoDee Hunt. The Kailua resident said one set of bills she received in March 2013 presented no means of verification.

"I called and was told that we needed to trust that they had recalculated correctly and the new bills should be paid by the due date," she wrote in her testimony. "If the bills were not paid, water supply to our buildings and home were in jeopardy.

"So, they have been paid, but I have an uneasy feeling that things might still be askew, or worse, I might have overpaid and have no way to prove it."

That, said water board officials, was at the worst of problems with the billing system. Speaking last week before the Council, Lau showed charts tracking the decline in abandoned calls after customer staff was increased. The number of calls overall has been cut in half since then, the average now put at 650 a day.

Water officials’ response to the audit also noted that most of the billing problems in 2013 were caused by a system processing error that was discovered and fixed in April. Only 2 percent of meter readings are now estimated due to automated reader failures, because extra effort has been made to circle back and manually recheck.

Auditor Young acknowledged the improvement but raised the concern about inefficiency, citing the resulting increase in labor costs.

On that front, Lau said a large-scale replacement of AMR batteries has partially remedied the problem, adding that the staff is in the midst of a study to identify fixes that would further reduce failures.

So far the Council has not moved to advance any legislation that would change the governance of the water board. The agency’s next order of business is to satisfy the auditor, who will provide an update to the Council a year from now.

And that process will start with meetings between Young and representatives of Tokumoto & Co., Lau said. The accounting firm did the study that produced the current water rates.

"We’ll get him together with the auditor and talk with him about how to get the process going to create a level of comfort with the auditor on the rates, that they are justified," Lau told the Council committee. "We feel they are."