Water rates increased 1%; sewer charges unchanged.

Along with many rule and program changes, the Water Board voted on Friday, to increase water rates by 1 percent. Effectively, that boost will bring water bills to $1.31 per hundred cubic feet on July 1, 2000. Sewer charges will remain at 159 percent of the water rates.

In addition to the rate increase, the Water Board voted in many modifications to its metering and frontage programs, and imposed a new, unique sewer charge on steam condensate that will affect 100,000 households and commercial establishments that use the Con Edison steam system. Approximately 60 percent of those customers use steam year round for both heating and air conditioning.

"This attempted reach for additional revenues by the [Water] Board[ldots]demonstrates a lack of understanding as to the dynamics of the energy problems facing all New York City residents and businesses," said Martin C. Seham and Scott Petersen, attorneys for the Owners Committee on Electric Rates (OCER) in a statement to the Water Board.

The steam condensate rate will depend on the service class and will be applied to water equal to a percentage of the HCF Equivalent [Hundred Cubic Feet] of its steam consumption. The percentage will run from 67 percent for the large commercial customers o 90 percent for small users.

Additionally, stream discharges to the wastewater system up to the property line will be 6.3 percent of all amounts billed to the steam customers. OCER has been advised that the Water Board charges will equate to a 2 percent increase in the rates paid by users of the steam system, and "could drive them to alternative and less environmentally-beneficial sources of energy."

"We're looking at it as an effective increase in the steam rates," said Peter L. DiCapua, senior vice president of Atco Properties & Management, who is the president of the OCER. "It's not a good thing for the steam system and Con Edison agrees with us. We have not been successful with any of our efforts [to dissuade the Water Board from these charges]."

There is concern that if the high usage steam air conditioning customers change to electric systems, it will cause a further shortage of electricity during the peak usage summer months.

In fact, Con Edison is so concerned about meeting summer peak loads - especially with the Indian Point reactor out of service - that it recently filed for a new program that will affect those high usage customers that are willing to curtail usage during peak periods or sell excess capacity, such as from cogen and emergency generation systems. The company also intends to modify its current rules to permit certain generators.

Since New York City's Business Services has been working with Con Edison to maintain the steam system, there may be more behind the scenes discussions over the Water Board's fiscal moves.

For residential water customers, under a new program, a flat rate billing option will be available to those owners of buildings with six or more residential units that institute a conservation program. This will require the installation of low-flow toilets, aerators and shower heads.

But this flat rate charge is expected to be approximately $414 per unit per year equal to that charged under the current retroactive transition program - may be more than the owner would pay under a metered rate, and may not be available in the future.

The flat rate was instituted because when buildings with certain populations switch to metered billings, the costs can become astronomical.

"Some apartment buildings that may be paying $350 a year on frontage, on the meter, with no caps, could be paying $600 or $700," explained Dan Margulies, executive director of the Community Housing Improvement Program (CHIP) a middle market owners group. "Obviously, those apartment house owners will opt for the flat rate. The problem is that while they are avoiding $600 or $700, the immediate impact is a huge increase from $300 to over $400."

Those in the industry recognize the cap will be helpful, but that it may not be good for every building. Debbie Ginsberg, president of Refund Consultants, who helps owners review their water bills, said "The program is terrific for the right apartment buildings. The [Water Board] had to be fair to owners where there are large families who use a lot of water, but the owners have to analyze the situation and not just jump for it."

Owners like Rosenberg Diamond that rehabbed buildings and installed low flow fixtures in the early 1990's were initially forced into paying metered charges that in some cases were exorbitant because of the particular building population's water usage. The Water Board ultimately created the retroactive transition program which now caps that charge at $414.

At one building near Yankee Stadium, which had to go to a meter rate under Local Law 53's rehabilitation provision, water bills jumped from $9,000 per year to $60,000, and then to $80,000. "I was penalized because I stopped the leaks," chairman Robert C. Rosenberg said then.

Rosenberg continues to worry that a flat rate cap of over $400 is just too high. "I have buildings where the rents average $300 a month or less," he said. "You are talking [about paying] over 10 percent of the monthly rent towards water alone. That's not right. In some cases the water can exceed the costs of fuel."

Rosenberg thinks the Water Board should charge less, and perhaps have the rate go up as rents rise. He would in general like to see costs go down, rather than have rents go up to prices that are uncollectible from his low income tenants.

To obtain the flat rate under the new Water Board program, owners will have to make an investment in plumbing and fixtures. A minimum of 70 percent of the units will have to be fitted with toilets rated at 1.6 gallons per flush or less, plus owners will have to install showerheads and faucets that cap the water flow at 2.5 gallons per minute or less.

"We believe many owners that should qualify are economically unable to pay for a toilet retrofit and therefore would be excluded," said Jack Freund, executive vice president of the Rent Stabilization Association (RSA). They have asked the Water Board to reinstate the old toilet rebate retrofit program, and have it paid for with surplus Water Board funds.

"For many, the flat rate will be an increase over the current frontage bill, and on top of it, they will be asked to retrofit, and it will be an unsustainable economic burden on many buildings," Freund added.

Freund said the RSA is pleased the Board kept this year's rise to 1 percent, although it represents a "one-time decline." Water rates have been increased by at least 4 percent per year in the past decade, and are expected to increase at least that much in years going forward.

The RSA would also like to see the Water Board extend the flat rate option to properties with fewer than six units which may also have rent regulated tenancies and high water bills.

The flat rate option will be an opt-in program over a three-year period and will not be billed before July 2, 2001.

For those owners that purchase properties on the frontage system, only to find they are being backbilled for the prior owner's water bills there will be a new Account Reconciliation Fee as insurance against those bills.

Current, those purchasing meter billed properties can request a final read to protect themselves from backbilled meter readings.

Other fees and changes will also be imposed.