Proposed Philadelphia Water Department Rate Increase

Significant Rate Changes on the Horizon

January 13, 2016
Michael C. Nines, P.E., LEED AP
MGKF Special Alert

On January 8, 2016, the Philadelphia Water Department (Department) filed Advance Notice of rate increases with the Philadelphia Water, Sewer and Stormwater Rate Board (Rate Board) and City Council.  The Advance Notice covers rate increases for Fiscal Year 2017 (July 1, 2016 to June 30, 2017) and Fiscal Year 2018 (July 1, 2017 to June 30, 2018).  New regulations governing proceedings for setting water, sewer, and stormwater management service (SWMS) rates and charges were recently adopted by the Rate Board, which became effective on December 14, 2015.

The proposed rate increase is designed to meet a revenue shortfall projected by the Department of approximately $105 million over the FY2017 and FY2018 period.  If approved, increases are anticipated to take effect on July 1, 2016.  As reported by the Department in its Plain Language Statement, proposed increases to water, sewer, and stormwater rates are projected as 6.20% and 5.50% for FY2017 and FY2018 respectively.  However, these proposed increases do not address the projected impact to non-residential customers as the Plain Language Statement is limited to increases for the average residential customer using 600 cubic feet of water per year. 

A review of non-residential customer water, sewer, and stormwater rates as proposed include increases as follows:

  • Monthly water usage charges for the first two thousand cubic feet of usage are projected to increase 16.9% and then 5.8% for FY2017 and FY2018 respectively.
  • Monthly sewer usage charges per one thousand cubic feet are projected to increase by 10.4% and then 7.2% for FY2017 and FY2018 respectively.
  • For industrial facilities discharging industrial wastewater to the municipal sewer system, surcharge fees for biochemical oxygen demand (BOD) are projected to increase by 1.1% and then 7.1% for FY2017 and FY2018 respectively.  Surcharge fees for total suspended solids (SS) are projected to increase by 13.6% and then 7.2% for FY2017 and FY2018 respectively.  For industrial facilities with heavy BOD and SS wasteloads, the proposed increases could represent a material impact.
  • Monthly SWMS charges are also projected to increase for gross area (GA) and impervious charges (IA).  For GA charges, fees are projected to increase by 3.1% and then 5.6% for FY2017 and FY2018 respectively.  For IA charges,   fees are projected to decrease by 0.6% for FY2017 and then increase by 5.5% for FY2018.

In addition to the increase in charges noted above, it is important to understand that the Department has NOT proposed changes to its stormwater credit regulations or processes for reducing SWMS charges.  This is particularly important for non-residential customers who are currently benefiting or are otherwise able to benefit from the Department’s stormwater credit program.   Also, no changes are proposed to the Department’s Enhanced Customer Assistance Program (CAP) for stormwater charges, therefore, non-residential customers currently participating in the Enhanced CAP are anticipated to continue participation in the program through FY2017 and FY2018.

Due to the Department’s concerns regarding the length of time required to complete its most recent rate setting process in 2012, the new process requires the Rate Board to make a final decision on proposed new rates and charges within 150 days from the filing of the Advance Notice with the Rate Board and City Council, and within 120 days of filing the Formal Notice with the Department of Records.  This process allows the Department to file more frequent rate proceedings with shorter rate periods.  As the 2016 rate proceeding is the first rate proceeding under the new rate setting process, the Department has selected a two-year rate period as optimal for determining whether shorter rate periods and rate filing on a more frequent basis are preferable to the prior practice of proposing four year rate periods.

As a next step, the Department is expected to file a Formal Notice of rate increases by February 5, 2016.  The Rate Board is anticipated to hold at least four public hearings and has established a process for interested parties to submit technical comments.  Those seeking to obtain formal status in the rate-making proceedings and become participants in the technical review hearings should submit a written request for a hearing upon filing of the Advance Notice and no later than seven days after the filing of Formal Notice (deadline anticipated to be February 12, 2016).

Complete copies of the 2016 rate filing Advance Notice documents can be found on the Rate Board’s website.

For questions concerning the PWD's FY2017 and FY2018 Rate Filings or assistance in submitting a written request for a hearing, please contact attorneys Jill Hyman Kaplan (; 484-430-2315), Bryan P. Franey (; 484-430-2308), or technical consultant Michael C. Nines (; 484-430-2350).