To: Montgomery County Council SENT BY EMAIL
Re: WSSC Spending Control Limits for FY22 Budget
I attest and affirm that the following statements are true, accurate, and within my personal knowledge.
The debt service calculations for the AMI smart meter project are based on nine-year-old figures. AMI schedule and expenditure estimates originate from a March 2011, R.W. Beck Study[1]. No CIP to-date accounts for increases in neither the amount of customers served nor the rise of equipment cost. This massive oversight renders the current $102.5M expenditure[2] a gross underestimate. Inaccurate financial figures have resulted in the debt needs projections being far less than what they should be. After several public objections, Commissioner Thompson has recently asked WSSC Management for an updated Cost Benefits Analysis for the AMI project, but that information is not reflected in this report.
In addition, one would be mistaken to believe that increasing rates will resolve WSSC’s financial problems. Instead, especially given the existing “stagnate revenue” stream, what will help to keep rate increases within inflation include taking certain measures such as better managing operation costs and not implementing debt-generating projects.
Take into account the following two inevitable issues in regard to the AMI debt-generating project: 1) the various reoccurring costs associated with completely digitalizing an infrastructure (i.e. frequent meter and battery replacement, software and hardware upgrades, program licensing fees, etc), and 2) the fact that the return on investment does not cover debt service costs. Ultimately, AMI will never pay for itself. Moreover, AMI will continue to be a financial burden to rate payers for years to come.
In addition, the proposal to increase customer rates during very financially challenging times needs to be reevaluated. “Over the past decade, WSSCWater’s residential annual bill increases have been significantly higher to cover WSSCWater’s substantial ramp-up of its capital program”.[3]Unfortunately, WSSC reported that in fiscal year 2020, its total Customer Assistance Program (CAP) participants[4] exceeded 13,500 customers while also citing a 90% Total Participant Growth since fiscal year 2016. Likewise, more than half of the Water Fund recipients4 for fiscal year 2020 reside in Montgomery County. The 90% growth within a four-year period and Water Fund Usage for the past fiscal year demonstrate pre-existing financial hardships and water unaffordability for many Montgomery County residents -- the latter further exasperated by the COVID-19 pandemic.
I strongly urge the Council the following:
–– to acquire a revised report based on updated figures with accurate fiscal year projections
–– to make said report easily accessible and cost-free to the inquiring public
–– to remove AMI from the CIP
–– to reject proposed rate increases for fiscal year 2022
In light of the WSSC’s past and current pattern of mishandling of its finances, it is imperative- for the sake of your constituents and the business structure of the WSSC - that Council immediately conducts a thorough, independent review of the WSSC’s finances and/or solvency.
I have presented no matter of mere “concern” or any other non-substantive matter.
[1]WSSC. Adopted Six-Year Capital Improvements Program Fiscal Years 2019 - 2024 (pp. 7-9). Laurel, MD. Retrieved from https://www.wsscwater.com/files/live/sites/wssc/files/Financial/Adopted%20FYs%202019-2024%20CIP_Electronic%20Version_Optimized%20Version.pdf
[2]WSSC Water. Proposed FYS 2022 - 2027 CIP: Staff Draft (pp. 7-9). Laurel, MD. Retrieved from https://www.wsscwater.com/files/live/sites/wssc/files/Financial/DRAFT%20Proposed%20FYs%202022-2027%20CIP_Public%20Hearing.pdf
[3]WSSC Water. Public Hearing: FY22 Washington Suburban Sanitary Commission (WSSCWater) Spending Control Limits (p. 8). Retrieved from https://www.montgomerycountymd.gov/council/Resources/Files/agenda/col/2020/20200929/20200929_9.pdf
[4]Knight-Lee, C., & Riley, K. (2020). Customer Affordability and Engagement Update. Presentation, Laurel, MD. Retrieved from https://www.wsscwater.com/files/live/sites/wssc/files/Commission%20Agendas/2020%20agendas/august/3.D.1%20-%2020-8-19%20Briefing%20o-1.pdf
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