May 29, 2014 – Jerry Johnson

  Questions sent to Jerry Johnson, Managing Director, WSSC, in advance of the meeting of May 29, 2014, and his responses:

Topic:   “What has WSSC done for us lately?”

The meeting was called to order by President at 7 pm by President Joan Fidler. Attendance was 13 including the speaker.

Mr. Johnson first described the work of the Washington Suburban Sanitary Commission (WSSC).

WSSC, created by the General Assembly in 1918, has a service area of 1000 square miles in Montgomery and Prince George’s Counties. It has nearly 450 thousand accounts, and its 1700 employees serve 1.8 million people.

 It plans 50 years ahead for water needs in cooperation with area jurisdictions, but there is no water shortage for the foreseeable future. There has been a lot of voluntary conservation of water, which has resulted in WSSC being able to add new customers without increasing water production.

 Several years ago WSSC was sued by environmental groups regarding grease in sewers. The suit resulted in a consent decree, which initially forecast the compliance work to cost $440 million. The final cost is now projected to be about $1.5 billion.

 WSSC is responsible for the potable water that enters homes and businesses and for the resulting waste water. The US Army Corps of Engineers is responsible for the Washington Aqueduct and the various reservoirs it feeds into. WSSC draws the water from the reservoirs, treats it and then delivers it to its customers. The counties are responsible for rain water runoff.

 In the past, for various reasons, water rates were not increased for several years. The result was that maintenance lagged and much of the system suffered. Now WSSC has to catch up for the years of neglect and that has caused rates to increase. Because so much capital—much of it borrowed—is needed for the repairs, the fastest-growing item in the budget is debt service. But because it is a government enterprise it can borrow money at rates lower than those that would be available if WSSC were privatized. WSSC’s triple-A bond rating is not dependent on the credit ratings of the two counties.

 The cost of treating the water is greater than the cost of the water itself. Rates charged to customers are progressive to an extent. As a customer’s usage rises, the cost per unit also rises. But the increased unit cost applies to all water used, not to just the increased amount over the previous, lower-priced level.

 Rates depend on costs. The Bi-County Infrastructure Funding Working Group issued a report in 2012 which discussed financing. It made a number of recommendations including separating volumetric costs from fixed costs. WSSC would like to move from quarterly billing to monthly billing but the information technology in use is geared toward quarterly billing.

1. WSSC has an annual operating and capital budget of $1.3 billion.  How does this compare with other jurisdictions in the area?   With recent rate increases, WSSC residential water rate of $4.05/1,000 gal is higher than Fairfax ($2.42/1,000) and Howard  ($1.77/1,000) counties.  What do we get for this additional cost?

WSSC has not analyzed these numbers.

2. A few years ago WSSC had one of the highest unbilled water rates in the country- 20%.  WSSC blamed old meters in older buildings and NIH for not paying their bills.  What is the unbilled rate now, and how do we compare with Fairfax and Howard counties?

The formula used to calculate unbilled water is questionable but the rate has dropped from 20% to about 15% The water systems in Howard and Fairfax counties are newer and therefore do not require the amount of maintenance and rehabilitation that the WSSC system does.

3. Many county residents have been receiving increases in their WSSC bills 100% and sometimes 1000% over prior bills.  What accounts for these huge increases?

           We had an unusually severe winter, which did not allow meter reading on the normal schedule. Therefore, the billings were for not the usual 90 days but for 120 or more days.

 4. The WSSC has known about the age of water pipes & mains for years & also that their failure rate would increase with age.   Do you have a plan for replacing them and what is the cost?

           Nearly half of all pipes in the WSSC system are at least 50 years old. However, the latest scientific techniques allow WSSC to pinpoint and repair problematic pipes more efficiently than before.

  5. What is WSSC’s position on the placement of large water mains especially in residential communities where a rupture can be hazardous.  A few years ago a rupture of such line in western Montgomery County made national news when a woman in a car was trapped and nearly drowned.  Have you considered using multiple smaller diameter pipes, spaced apart, operating parallel to each other, designed so that the failure of one pipe does not impair flow through the others.  Is there a financial reason for this?

          In the future such pipes will be placed in deep tunnels rather than near the surface.

  6. It was reported in the news recently that the huge $164 million installation by WSSC of a bi-county water pipeline 160 feet underground is coming in under budget and ahead of schedule.  How were you able to accomplish that and are there lessons to be learned for large projects in Montgomery County?

          WSSC did a lot of very careful planning and identified the risks. Therefore, bidders knew with considerable certitude that their risks of running into unexpected problems were minimized resulting in very competitive bids.

The meeting adjourned at 9:05 pm.  The next meeting will be June 12, 2014.