PORTLAND — The grim economy is hitting some consumers in the wallet in yet another way: their water bills.
Many water utilities are raising rates because water use is down, in part because manufacturers have closed or are cutting back, tourism has fallen and the real estate market is in the doldrums.
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Water sales for the Kennebunk, Kennebunkport & Wells Water District fell 11 percent last year, to 1995 levels. The No. 1 reason is the sour economy, said superintendent Norm Labbe.
One of the utility’s largest customers, a catalog printer, shut its doors last year, putting 374 people out of work. Tourism also has been down — meaning fewer tourists are taking showers and flushing toilets in the motels in beachside communities.
“Many, many (water utilities) around the country are seeing decreases in revenues,” Labbe said. “Because if industry goes down, revenues go down.”
A recent study by the Water Research Foundation, a Denver-based nonprofit, on the recession’s impact on water utilities found that home foreclosures and business contractions have reduced water demand in many areas. Cities with high unemployment also have seen reduced water consumption as people move away in search of jobs, said Rob Renner, the foundation’s executive director.
Water companies for the most part get their money from customers. When water consumption goes up, revenues go up — but when consumption falls, so do revenues.
Water companies often raise rates to pay for high-priced capital expenditures, such as new water lines or treatment plant expansions. But they also have to hike rates when water use goes down to bring in enough money to pay their basic operating costs.
Water rates are based on a wide range of factors, such as infrastructure and water treatment costs as well as revenues from water use. When water use falls, that would be a reason to seek a rate increase, Renner said. Nowadays, the bad economy is taking a toll.
In the town of Baileyville along the Canadian border, residents faced the prospect of both lost jobs and higher water bills when the local pulp mill announced it was closing.
Baileyville’s water utility proposed raising rates 80 percent after the Domtar Corp. mill, the utility’s largest customer by far, said it would close because of the poor global economy. Domtar accounted for 52 percent of the utility’s total sales, and residents would have seen their minimum quarterly bills go from $55 to nearly $97.
Domtar shut down last May, putting 300 employees out of work, but reopened two months later after business conditions improved. Even so, the Baileyville Utilities District had to raise rates 9 percent.
But the prospect of nearly doubled water rates when residents were losing their jobs was too much for Baileyville, a small town of about 1,500 people where employment largely revolves around the pulp mill.
“You’ve got to charge more when revenues go down,” said water utility manager Gardner Ross. “But people don’t have incomes coming in, so it’s a double-whammy.”
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