In 2010, the S&WB gave away more than 800 million gallons of drinking water and sewer services valued at $5.5 million
Every year, tens of billions of gallons of water are lost through the city's leaky pipe system, making it impossible for the Sewerage & Water Board to collect a dime. But there is an appreciable amount of water that the agency gives away that it could collect on, if it weren't for a series of state laws that mandate certain public institutions get it for free.
View full sizeThe dramatic spray of water in Popp Fountain in City Park is provided free from the S&WB. The water board provides water at no charge to public fountains and swimming pools, as well as other public institutions.Beneficiaries include City Hall, playgrounds and swimming pools, police and fire stations and other municipal facilities, as well as a few recipients outside city government, from public schools to Audubon Park and Zoo, City Park and the New Orleans Museum of Art. Some also receive free sewer services.
In 2010 alone, the S&WB gave away more than 800 million gallons of drinking water and sewer services valued at $5.5 million.
As water board officials, city leaders and residents debate a new proposal that would more than double customer rates for water and sewer services by 2016, some have asked whether the agency ought to cut off the spigot of so-called "free water" before asking ratepayers to pony up more in their monthly bills.
Perhaps no one has been more vocal than New Orleans City Councilwoman Stacy Head, a water board member who is vying for the council's vacant at-large seat. In memos dating to April and during a board meeting last month, Head has pressed top S&WB staffers on the fiscal wisdom of water subsidies.
"We're giving free water to awhole lot of people," she said. "Is it appropriate for the burden to be borne by the Sewerage & Water Board?"
Head argues that giving away water -- even to her own City Hall office -- encourages users to waste it because they can ignore the bottom line.
She also argues that local taxpayers, not S&WB customers, should foot the bill for those agencies' water usage. While most New Orleans taxpayers also are S&WB customers, a small fraction -- owners of empty lots and shoppers who live in other parishes, for example -- get a pass because they don't pay a water bill, she and others contend.
Acknowledging the argument in theory, a spokesman for Mayor Mitch Landrieu dismissed it out of hand.
"It's a red herring and a shell game," Ryan Berni said. "It's just taking money from one agency and giving it to another."
S&WB Deputy Director Robert Miller said the water board would collect annually an additional $2.2 million for water services and $3.3 million for sewer services, based on 2010 figures, if entities that get those services for free had to start buying them.
Overall 2011 revenues were $64.7 million for the water system and $73.7 million for sewer services, and nearly all came from user fees, records show.
The additional revenue, Miller said, would provide a small boon for the S&WB for a brief period but ultimately would not result in lower rates for customers unless the City Council authorized a new rate structure.
At the same time, city government, local school boards and other entities likely would fold the new costs into their annual budgets and pass them along to taxpayers, he said.
"There would be no net benefit to taxpayers, as the new taxes needed by the city would fully offset any reduction in revenues required from ratepayers," Miller said by email.
Though Miller pegged the value of free water and sewer services entities in 2010 at $5.5 million, he noted that because water utilities tend to have high fixed costs to maintain equipment and pipes, the marginal cost of providing those services really was about $500,000.
Meanwhile, the volume of free water distributed in 2010 to public institutions amounted to only 1.5 percent of the total volume of water the agency pumped out of its two purification plants, records show. The S&WB used roughly the same amount to run equipment at its own facilities, and another small amount went to put out fires, clean streets and flush sewers.
Just a quarter of the more than 54 billion gallons of water treated in 2010 was distributed to paying customers, records show.
As for the remaining 40 billion gallons, Miller said most leaked out through small pipe fissures and major main breaks. That's why, Landrieu's spokesman said, the water board needs to increase revenues, possibly by increasing rates.
"The real story is securing the billions of dollars needed for infrastructure improvements and operations and maintenance costs for our water, sewerage and drainage systems," Berni said, adding that rate increases must be affordable.
Meanwhile, S&WB officials have no plans to ask the Legislature this year to change the laws that require them to provide free water -- in some cases up to specified caps -- to public institutions, though the "staff intends to work with building managers at all free-water facilities to reduce the amount of water wasted through leakage," Miller said.
Audubon Nature Institute officials said they do their best to conserve by collecting rainwater from four Uptown streets, then filtering it through lagoons at the park before using it to irrigate the golf course, spokeswoman Sarah Burnette said. They also recycle all water used in the Cool Zoo splash park, she said.
Even so, the institute last year paid the S&WB $120,000 to cover usage beyond the cap set in state law, she said.
Michelle Krupa can be reached at mkrupa@timespicayune.com or 504.826.3312.