WSSC Selects New Rate Structure

Takes Effect July 1, 2019

LAUREL, Md. – July 18, 2018: Commissioners today selected a new combined water/sewer volumetric rate structure for all 1.8 million WSSC customers in Montgomery and Prince George’s counties – the first new rate structure in more than 25 years. The unanimous selection of management’s recommended 4-tier inclining block structure follows a transparent and collaborative public process. The new rate structure is expected to go into effect on July 1, 2019.

“Today’s selection of a new, modern, resilient rate structure marks the conclusion of what has been a thoughtful, thorough and deliberate process that made public outreach a priority,” said WSSC Commission Chair T. Eloise Foster. “As we move forward toward implementation, we will continue to reach out to our many stakeholders and keep them apprised of the policy and fiscal implications of today’s action.”

The development of the new rate structure involved nationally-renowned rate structure experts, an authority on Maryland water conservation, a consumer advocate and affordability expert, and extensive customer outreach. To ensure customers were engaged, WSSC held or participated in more than 30 public meetings or hearings since spring 2017, which were attended by approximately 1,500 customers and generated more than 300 total comments. Additionally, all WSSC meetings were livestreamed and seen by nearly 2,500 viewers.

“The new rate structure sends a clear conservation message to our customers,” said WSSC General Manager and CEO Carla A. Reid. “This will allow us to comply with state law that requires public water systems to improve water conservation. The new rate structure also addresses affordability and significantly simplifies the rate structure for our customers.”

The new structure is known as an inclining block rate structure, meaning that the price for water increases as customers use more and enter higher tiers (see chart below). With the passage of the Maryland Water Conservation Act of 2002, the Maryland Department of the Environment’s regulatory guidance specifically identifies an inclining block rate structure as a pricing strategy that encourages water conservation.

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Approximately 93 percent of all WSSC bills are for residential customers. The typical residential household size in the WSSC service area is three people. The new rate structure is expected to lower quarterly bills for a three-person household using 55 gallons of water per person per day, which is the average per person consumption for WSSC (see graphic below).

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The basis for the new rate structure included: Customer input, Commissioners’ policy priorities, Cost of Service Study, Maryland Public Service Commission’s (PSC) directive to develop a new structure, WSSC customer information, advice from nationally-recognized experts in rate structure design, and consideration of the impact of various rate structures on water conservation, customer affordability, revenue stability and rate stability. The Maryland PSC directed WSSC to develop a new rate structure after ruling the current 16-tier structure was unreasonable because it was unduly preferential to low-usage customers.

The new rate structure is intended to better align costs with rates, to reflect customer and Commission rate setting policy goals and objectives, and to provide a more predictable revenue stream to pay for infrastructure improvements. Additionally, under the newly approved rate structure, customers will be charged only for the water used in each tier. Currently, customers are charged at the highest tier of water used, back to the first drop of water.

Customers can find more information on the rate structure selection process, including past presentations and videos of meetings by visiting wsscwater.com/ratestudy.