BWS says additional spending required because of Red Hill-related problems and inflation is forcing it to charge higher rates
BWS says additional spending required because of Red Hill-related problems and inflation is forcing it to charge higher rates
Water prices may be increasing more than 50% over the next five years for most Oahu customers, if new rates proposed by the Honolulu Board of Water Supply are approved this fall.
BWS blamed inflation, the need to invest in new facilities because of fallout from the Navy’s Red Hill water crisis, rising electricity costs and pandemic effects for the new rate proposals.
The proposed increases for water rates and water meter charges are 10% on Jan. 1, 2024; 10% on July 1, 2024; 9% on July 1, 2025; 8.5% on July 1, 2026; 8% on July 1, 2027, and 8% on July 1, 2028.
Some variation exists for single family residential customers, who are priced based on tier of water usage in order to encourage conservation. Residents who use less water would see a smaller rate increase.
A single family household would see a gradual increase from the current median rate of $42.01 per month to $65.58 on July 1, 2028.
BWS last approved a new rate schedule for the period spanning 2019 to 2022, and rate increases then were far lower. Total rate increases were less than 20% for all tiers of residential use and about 5.2% total for non-residential customers.
The agency has been making its case at community meetings and neighborhood board meetings as it seeks public input ahead of its monthly board meetings this fall, when it will vote on the proposal.
At a meeting last month at Kapolei Hale, resident Marisela Larson opined on Oahu’s already high cost of living, saying that increased water bills will add to that.
“I just don’t know how regular families are going to deal with that expense,” she said to BWS manager and chief engineer Ernest Lau. “And I’m just afraid, obviously, that more people will continue, probably, to move out of Hawaii over time because of this increase in cost overall.”
While many city departments and agencies have felt the effects of inflation and rising electricity costs, BWS said its semi-autonomous setup limits its options for recouping those costs. The agency doesn’t get funding from the city’s annual budget so must rely on customers for all of its revenue.
Different types of customers pay different rates. Single family homes, for example, pay less than what it costs for BWS to deliver water, and that difference is subsidized by higher rates for businesses, agricultural interests and multi-unit residential customers.
These differences mattered when the Covid-19 pandemic hit Hawaii in March 2020. Because businesses were largely closed and people’s water usage shifted to their homes, BWS lost out on a significant amount of its high-yielding, non-residential revenue.
“A lot of businesses never recovered. They closed up,” BWS spokeswoman Kathleen Pahinui said. “A lot of restaurants closed up – and of course, restaurants are one of the largest users of water in the business sector.”
BWS officials pointed to other factors too. 
Inflation since 2018 rose higher than water rates; new wells have to be drilled to deal with the Navy’s fuel storage tank leaking into the water supply at Red Hill. And aging infrastructure constantly needs to be updated. 
“I think the rate increases they’re proposing are warranted and supported by their rationale,” said John Reppun, a member of the Kahaluu neighborhood board who also sits on the BWS Stakeholder Advisory Group
Many residents said they appreciated the board’s transparency but worried the proposed increases are hefty and would be difficult to pay for some customers. Some attendees asked BWS what it already has done to decrease its costs.
Lau responded that the agency decided to not raise its budget during the past year, deferring non-urgent maintenance. Setting rates requires a tricky balance between covering costs and not overburdening customers, he said.
“When we do the rate study, we run multiple scenarios. I think we must have run at least 20 to 30 different kinds of scenarios,” Pahinui said in a telephone interview. 
One example: the board had considered charging single family home customers 100% of their cost rather than 95%. But that idea was rejected because the subsequent rate increases would’ve been too high, she said.
Mayor Rick Blangiardi expressed a similar view during a recent interview with the Civil Beat Editorial Board, although he later stressed that he has no direct say in the decision that will be made by BWS.
Asked during the meeting about a scuttled proposal to raise public transit fares, Blangiardi said he thinks that people’s pocketbooks are not healthy enough to start implementing rate increases.
“Now is not the time – on anything. I’m having those conversations with the Board of Water Supply; I’m having those conversations with Environmental Services,” he said.
This ongoing series examines the factors that are making it so hard for Hawaii’s working class citizens to survive and thrive, the good ideas that have surfaced to help ease the pain and the reasons policymakers fail year after year to do anything about it.
In a phone call later, Blangiardi said these conversations were simply to remind the board to consider Honolulu’s high cost of living as it sets the next rate schedule.
“I don’t want us to be tone deaf to the community right now,” Blangiardi said. “Towards that end, I’m obviously sensitive. But I have to stay in my lane on this one.”
While the seven volunteer board members are mayor-appointed and City Council-approved, neither branch of government has direct power over the board’s decision-making. 
The board has maintained this semi-autonomous status for 93 years, the idea being that water operations need to be kept away from direct political influence. 
Healani Sonoda-Pale, a member of the Kuliouou-Kalani Iki neighborhood board, thinks the federal government should contribute more to offset costs given the military’s role in the Red Hill water crisis.
“I understand that the Board of Water Supply is in a really difficult position here, financially. However, the Navy and the U.S. Department of Defense should actually be helping to keep the cost down for residents, since they’re actually responsible for a lot of the extra costs,” she said. 
Asked about this at a community meeting, Lau said the total economic cost of the Red Hill water crisis is still undetermined. And when it comes to paying it, he said, “we’re keeping all options open, including legal options.”
BWS is also starting to “aggressively” look for federal money in the form of program grants, which will mean needing less money from customers, he added.
BWS is accepting public comment through Oct. 15. Commenters can email, call 808-748-5041, submit an online form on their website or mail a letter to their location at 630 South Beretania St.
Struggling To Get By” is part of our series on “Hawaii’s Changing Economy” which is supported by a grant from the Hawaii Community Foundation as part of its CHANGE Framework project.
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