The Pittsburgh Water and Sewer Authority board approved a 5 percent increase to be added to all water bills yesterday.
The authority plans to place all of the receipts from the "distribution infrastructure system charge" into a special fund for fixing the leaky system.
The charge should add $2.23 a month to the bill of the average residential customer who uses approximately 5,000 gallons a month. It will also be added to commercial, industrial and institutional clients' bills.
Money from the new charge is to be earmarked for specific infrastructure improvements, said PWSA Executive Director Michael Kenney.
"You're basically taking the money from rates and earmarking it for public improvements."
He said it would raise an estimated $4.5 million a year -- not enough to make big changes, like the massive improvements to the water plant that are under way, but enough to pay for some line replacements, rebuilding or refurbishing pumps and valves, and buying more effective computers. That will mean less borrowing and more improvements to the system, he said.
"We need to continually reinvest and this is the way to guarantee that we can do that," he said.
The board also decided that it will tap into its unrestricted reserve accounts to balance its budget next year.
"This is the first year in the last five [years] for us to dip into the reserves," Mr. Kenney said after the meeting.
Mr. Kenney calls this good fiscal news for the authority. Board member Patrick Dowd said better news is the introduction of optional insurance that will be added to customer bills as of Jan. 1.
"It's the best news of the day, of the year, perhaps of the decade," said Mr. Dowd, chairman of the authority's finance committee and a Pittsburgh city councilman.
Customers next year will see an automatic increase in their bills of $5 a month for the insurance. Anyone can opt out of the insurance premium and get full refunds within the first six months of 2010.
But, Mr. Kenney said, those who opt out will do so at potentially great financial risk. As water and sewer authorities statewide comply with a consent order to separate storm sewers from waste lines, customers could get stuck with paying for any work on their properties.
The costs for such work could be tens of thousands of dollars, authority engineers said today.
The insurance also would cover other costs, including private repair bills for leaks or line replacements and expensive die tests to determine whether storm and sewer lines are properly segregated, said Mr. Dowd.
The new insurance will replace the current warranty system that pays up to $6,000 for repairs or work that could cost as much as $28,000 for a customer with deep sewer problems, Mr. Dowd said.
"If you have even one [major] event in a lifetime, this more than pays for itself," Mr. Kenney said.
The authority board unanimously approved next year's budget of nearly $149 million, including about $8.1 million transferred from reserve funds.
Under the program, the authority will borrow less, floating fewer bonds, to pay for such jobs.
That will mean less borrowing and more improvements to the system, he said.
The final act of board Chairman Don Walko was to say goodbye to the authority. The Democratic state representative from the North Side is to be sworn in later this month for his first term as an Allegheny County Common Pleas Court judge.
Jim McKinnon can be reached at firstname.lastname@example.org or 412-263-1939.