Who should set city's water rates?

Today's debate: Should an independent rate-making body be established for fixing and regulating charges for water and sewer services?

That was the issue City Council's Committee on Law and Government tackled this afternoon, approving the measure which was sponsored by Council president Darrell Clarke.

Under Clarke's proposal, voters would have to approve an amendment to the Home Rule Charter to establish an independent board. Should Council approve Clarke's bill the question would be on the ballot in November.

City Controller Alan Butkovitz testified that since 2009 water rates have increased by 18 percent. In February the Water Department announced plans to seek a 28.5 percent rate increase, that if approved would begin in October and spread over the course of three years. The average customer would see an $196 increase a year over today's rate.

Currently, a rate request must go through a public-hearing process and Clarke, Mayor Nutter and Butkovitz would select a hearing officer and a public advocate. The final decision to approve a rate is made by the Water Commissioner.

"I believe that a fairer, independent and transparent system can only increase the public's perception that proposed rate increases are fully vetted and independent," Butkovitz said.

Committee chairman Councilman Bill Greenlee said some describe the process as apolitical, but he wondered how that could be when the Water Commissioner –who is appointed by the Mayor –proposes the rate and then ultimately makes the final decision.

"A lot of the public has indicated to me that they don't have confidence in that proposal," Greenlee said.

Council commended Water Commissioner Howard Neukrug and assured him that they were confident in his work, but had misgivings about the process.

Clarke has said that Philly seems to be the only large city that does not give elected officials or boards selected by elected officials the power to approve the rates.

The Administration expressed concern about Clarke's proposal adding that it would "cause concern among bond rating agencies, current bond holders and future bond buyers who have relied on the current rate setting process in connection with evaluating the Department's credit rating, and who would be left unsure as to what the future rate setting body would be," said Andrew Stober, the chief of staff for the Mayor's Office of Transportation and Utilities. "This uncertainty alone can have a harmful financial impact on the Department's costs of borrowing, therefore ultimately harming our rate payers."

The Water Department has said the increase is necessary to deal with a projected $316 million budget shortfall over the next four fiscal years.

Several business owners testified that the rate increases coupled with storm water rate increases will force businesses out of the city.