Michigan Welfare Rights Organization
"You get what you are organized to take!"
The Original Water Affordability Program Proposal, 1/05
Michigan Welfare Rights Organization's Water Affordability Program
It was drafted by Roger Colton of Fisher, Sheehan & Colton. The MWRO attorneys are Lorray Brown from the Michigan Poverty Law Program*, Marilyn Mullane from Michigan Legal Services, and Ted Phillips from the United Community Housing Coalition.
A WATER AFFORDABILITY PROGRAM FOR THE CITY OF DETROIT
Click here for information on recent Detroit City Council water rate votes. Slideshow summary presented before the Detroit City Council, February 10, 2006. Prepared by Roger Colton.
Components of the Affordability Program
Cost Recover for Rate Affordability
--Bad debt offsets
Rate Affordability Expense Savings
Impacts of affordability program: Columbia Gas
Impacts of affordability program: National Fuel Gas.
Basic Consumer Protections Service disconnects for nonpayment.
--Ban notice with no present intent to disconnect.
--Impose time limit on efficacy of notice.
--Limit number of notices not acted upon.
Basic Consumer Protections Payment Plans for Arrears.
Innovations in collections
Summary of program proposal
*The Michigan Poverty Law Program (MPLP) is a cooperative effort of Legal Services of South Central Michigan and the University of Michigan Law School.
Prepared by Roger Colton, Fisher Sheehan & Colton Public Finance and General Economics
34 Warwick Road, Belmont, MA 02478, (617) 484-0587 January 2005
[MWRO note: The information provided here is directly reproduced from the Water Affordability Program proposal. Persons who are interested in viewing the entire report may do so at the MWRO office, or they may contact the recipients of the proposal: the Detroit Water and Sewerage Department, and members of Detroit City Council.]
Part 1: An Overview of Affordable Water Rates
[Pg 1] This proposal is presented to the Detroit Water and Sewerage Department (DWSD) on behalf of the Michigan Poverty Law Program/Michigan Legal Services and their related clients. In recent years, the unaffordability of water/sewer bills in the City of Detroit has become a substantial problem. Not only have customers been disconnected, and gone without service, but even the households that pay their bills incur substantial hardships because of the unaffordability of their bills.
While the unaffordability of water/sewer service certainly poses a social problem, it manifests itself as a business problem as well. The unaffordability of water/sewer service contributes to unpaid bills and the associated collections expenses associated with such unpaid bills. In addition, the unaffordability of water/sewer service contributes to increased costs such as uncollectible accounts and the working capital associated with arrears.
The affordability program contained in the narrative discussion below reflects the social need for affordable water/sewer bills and the business need for affordable water/sewer bills. The proposal contains three components:
Part 6: Summary
[Pg 44] Unaffordable water/sewer bills pose substantial problems to low-income Detroit residents. Not only do unaffordable bills impede the ability of low-income customers to make their water/sewer payments, but such bills also impose substantial physical, emotional and social hardships even on low-income customers that make their payments.
Beyond the impacts on low-income customers, water/sewer bills that are unaffordable to low-income Detroit residents pose a business problem for the Detroit Water and Sewerage Department (DWSD). Increased financial costs to the DWSD result from increased credit and collection expenses arising from the need to "chase" bill payments; increased working capital expenses associated with higher arrears, and increased bad debt/uncollectible expenses associated with long-term nonpayment.
This proposal contains three sets of recommendations to address these social and business problems associated with the unaffordability of water/sewer bills. The proposal recommends:
The combined effect of these three sets of recommendations will not only be to address the unaffordability problems facing low-income Detroit water/sewer customers, but also to rationalize the overall collection efforts undertaken by DWSD.
Each set of recommendations should be adopted.