Brian G. Glass, senior attorney, before the Committee on Transportation and Public Utilities Council of the City of Philadelphia

Stormwater hearing, Item No. 100814
Philadelphia, Pennsylvania, February 8, 2011

Good afternoon. My name is Brian Glass and I am a senior attorney at PennFuture. I represented Next Great City in the rate proceeding before the Philadelphia Water Commissioner at which the stormwater charges at issue today were approved.1

As you know, the Philadelphia Home Rule Charter authorizes the Philadelphia Water Department to fix and regulate rates and charges for the services that it provides to city residents.2 In turn, the Philadelphia Code provides the standards by which the Water Department is to fix and regulate those rates and charges.3

One of those standards provides that "[t]he rates and charges shall be just, reasonable and nondiscriminatory as to the same class of consumers."4 All nonresidential properties are in the "same class of consumers." As such, their rates and charges for services must be just, reasonable and nondiscriminatory when compared with one another.

The recently approved stormwater rate design satisfies this standard. Under the new design, customers are charged for stormwater services based on the size of their properties and on the amount of hard surfaces covering those properties – both good indicators for how much stormwater those properties actually contribute to the city sewer system. So, customers pay for the operation and maintenance of the city sewer system based on how much they use it. No more. No less. This design is imminently "just and reasonable."

The previous stormwater rate design? Not so much. Under that design, customers were charged for stormwater services based on the size of the water meter serving their properties – which bore little to no relationship to how much stormwater those properties actually contributed to the city sewer system. So, some customers overpaid for stormwater services, while others underpaid -- like parking lot customers with no water meter serving their properties, who paid absolutely nothing for the large volumes of stormwater running off of their sizeable hard surfaces and into the city sewer system.

One court considering the previous rate design in which stormwater rates were based on a customer's meter size commented on whether such a design was nondiscriminatory. Although he ultimately did not decide the issue, Philadelphia Court of Common Pleas Judge John Herron, in a case called Public Advocate v. City of Philadelphia, acknowledged that "this method of charging for stormwater collection appears to present a discriminatory rate among consumers of the same class."5 Let me say that again: The method for charging for stormwater that is based on the size of a customer's water meter "appears to present a discriminatory rate among consumers of the same class." Given that rather candid acknowledgement, it would be imprudent for Philadelphia to return to the previous stormwater rate design, which likely would expose the City and the Water Department to legal challenge from customers who were overpaying under that previous design.

Fortunately, there is another way to help customers who have seen their rates increase as a result of the recently approved rate design. Because under the new design stormwater charges are based in part on impervious area, customers can take steps to reduce those hard surfaces on their properties, and capture the stormwater that they would otherwise contribute to the city sewer system, in order to reduce their stormwater charges. There are a number of stormwater management practices, such as installing rain gardens and planting trees, that customers can implement on their properties to lower their stormwater bills. What's more, the Water Department is already offering a number of programs to assist impacted customers who want to implement these practices.

For all of these reasons, PennFuture and Next Great City urge the Committee and Council to keep the new stormwater rate design in place. At the same time, we urge the Committee and Council to encourage the Water Department to continue offering innovative programs to assist impacted customers who are ready and willing to implement stormwater management practices on their properties.6 Thank you for your consideration of this testimony.

1 PennFuture and Next Great City are described in the testimony of my colleague, Rachel Vassar of PennFuture.
2 Philadelphia Home Rule Charter § 5-801.
3 Philadelphia Code § 13-201(2).
4 Philadelphia Code § 13-201(2)(d). There is also an "exacting" "constitutional requirement" that rates be "just and reasonable." Public Advocate v. Phila. Gas Comm'n, 544 Pa. 129, 139-40, 674 A.2d 1056, 1061 (Pa. 1996) (citing Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591, 607 (1944)).
5 26 Phila. 527, 542-44 (Phila. CCP 1993).
6 These practices also will help Philadelphia meet its regulatory obligations to reduce combined sewer overflows to our rivers and streams and carry a number of ancillary benefits to residents. See generally