Want Fair Water Rates? Senate Bill 1724 Is a Good Start

May 14, 2019 / Blogs

Update: SB1724 is on the Governor’s desk. MPC has asked Gov. Pritzker to sign it without delay

What we don’t know about water rate setting is, unfortunately for people who want a solution, the crucial piece: what’s causing these rate variations and hikes?

After the Chicago Tribune published its “Water Drain” series, which details the incredible variation in water rates charged to Lake Michigan water users, there has been a flurry of activity meant to address the problem. For example, some suburban communities are considering massive infrastructure projects for the sole purpose of switching their water provider, with the notion that it may somehow lead to lower, more predictable, water rates.

Solutions like this are meant to address what we know about water rates:

Within the hundreds of permitted municipal and other users of Lake Michigan water, there is substantial variation in the rates being charged.
Rates are generally on the rise (but at very different paces), and
Some low-income communities appear to have rates beyond what their residents and businesses can reasonably pay.

What we don’t know about water rate setting is, unfortunately for people who want a solution, the crucial piece: what’s causing these rate variations and hikes?

Without a comprehensive understanding of what problem they are meant to solve, various solutions to that problem will be at best partial. At worst, they might have unintended, counterproductive consequences for water users. Capping rate increases – another proposed solution – without understanding why they have been escalating, could lead to service degradation or shutoffs as utilities try to make up for vanishing revenues.

Clearly, what we need is to hit pause, gather some information, and develop data-informed policies to address rising water rates. MPC has been heavily involved in drafting legislation and talking to stakeholders to get this crucial information.

SB1724 Shines Light on Utility Rates

SB1724, passed unanimously in the Senate under the charge of Sen. Napoleon Harris III (D-Harvey) and currently sponsored by Rep. LaShawn K. Ford (D-Chicago) in the House, calls for a study of water rates throughout Illinois. The bill proposes a comprehensive study of water rates, first in the Lake Michigan Service Area, and eventually for the whole State.

Here’s the details on the study:

Academic experts at the Government Finance Research Center at the University of Illinois – Chicago will carry out the study.
The study will answer the following questions:
- What are the different components of water bills?
- Why are water rates increasing?
- What is an affordable water rate?
- Is there any evidence that some utilities are using inappropriate rate-setting practices?
- Do State and local policies play a part in rate increases?
- What are the challenges to rate-setting for low-income communities?
- Can increased cooperation among units of government create fairer rates?
After answering these questions, the study team will create a report delivered to the Illinois General Assembly.
The report will solicit input from stakeholders in government departments, municipal utilities, and non-profit environmental and health organizations.

MPC has been involved in shaping this bill from the start, working with state agencies and academic experts to makes sure we found the right people to carry out the study. The Government Finance Research Center is enthusiastic about the expertise they can bring to this question.

We think SB1724 addresses a critical gap in understanding. For that reason, MPC supports SB1724.