Detroit Water determined to push ahead with shutoffs and other costly, ineffective tactics

Dec 17, 2015 at 2:31 pm

If the officials governing decisions for the new water authority are fully informed — and you have to hope they are — isn't it unusual that they're charting a course for the authority that consistently fails, is dramatically more expensive, and could contribute to a public health crisis? Yeah, you might think so.

See, experts have repeatedly told the powers that be that income-based plans, which charge customers what they're realistically able to pay, benefit ratepayers and utilities alike. Relying instead on payment assistance plans and shutoffs is much more expensive, and ends up sticking all ratepayers with higher costs.

How does that work? We talked to Roger Colton, an economist and lawyer to works with utilities to come up with income-based plans, which are utterly noncontroversial in those places. He tells us: "It’s better to collect 90 percent of a $70 bill than it is to collect 50 percent of a $100 bill, because if you collect 90 percent of the $70 bill you’re getting $63, you’re getting $13 more in revenue, and then you spend less [on collection] in the process."

The concept, familiar to economists, is called "net back," which is the amount that a utility is really collecting, with the cost of collection subtracted; what’s left over is what a utility can use for your expenses like operation, upgrades, expansions, and paying down old debt.

"By providing an affordable bill," Colton says, "we actually increase the net back to public utilities." Needless to say, it results in lower water and sewerage bills for ratepayers.

Unfortunately, the forces coming up with water policy in Michigan are running in the opposite way, courting extra expenses that will likely add up to higher bills for customers.

It's all outlined in a piece in the Detroit News, one oddly titled "Detroit unlikely to forgive water debts of poor." Honestly, we've been following the issue for some time, and this is the first we've heard about "debt forgiveness."

The fact that somebody would choose to frame the issue this way shows that the forces of darkness are hard at work. We could have been comparing and contrasting ineffective, charity-based assistance and solid, income-based policies, and instead now we're discussing "debt forgiveness." 

The piece pretty much follows the party line of the water barons: Income-based billing is illegal, they say. We can't afford to pay the assistance our poverty demands, but we can shell out millions of dollars for shutoff contractors. Putting debt forgiveness right up front is a great way to obscure the real issues.

Also, the piece quotes Julius Ciaccia, CEO of the Northeast Ohio Regional Sewer District. He says, "Debt forgiveness is asking for trouble."

That's a very interesting quote for several reasons.

First of all, lots of places have embraced income-based billing. It isn't difficult to find those officials who might have a good word to say about it, after they got over their initial skepticism. That might have made a good story, in fact.

Instead, we get Ciaccia talking about a completely different issue, one he obviously doesn't like. But beyond his obvious distaste, what are his specific reasons? Why run a dismissive, otherwise insubstantial quote from this out-of-stater?

Furthermore, Ciaccia may not be the best person to ask for a quote about anything. As our sister paper in Cleveland, Cleveland Scene, reported, "In a nominally functioning city, Ciaccia would have been jettisoned long ago. Though never formally charged, federal prosecutors have accused him of accepting bribes, and his department has been home to continuous looting and a string of corruption scandals spanning 15 years. ... He's survived two massive bribery trials, ... not to mention sexual harassment and discrimination scandals." 

Also, it might have interested readers to know that Ohio was the first state to embrace ... (wait for it) income-based billing for its energy companies. In other words, the very thing officials in the Detroit area are resisting has been SOP in Ohio since the 1980s. Gee, that puts a whole new light on things, doesn't it?

Perhaps the most absurd thing in the article was a statement put forward by Gary Brown, a guy we used to respect once upon a time. He told the News that the city will hire several collections agents who double as social workers, to direct the needy to work training programs.

Now, we've seen a lot of bullshit in our day, but the idea that your collection agent can be your social worker most be the most astounding pile of bullshit we've ever seen. The very guy who's going to demand you pay up or shut off your water calls himself your "social worker"? Brown must have balls of brass to give utterance to such nonsense.

In short, we wouldn't blame anybody for deciding to write off the Detroit News as a source of reliable information when it comes to utility policy in Southeast Michigan. And that's a shame, because, as analysts such as Colton have told us, the answer is in plain sight of officials, if only they could get over their stubbornness:

"They need to get over their ideology," he told us, "and realize that when they have a whole lot of people that aren’t paying, that that’s not only a social problem, it’s a business problem, and when people finally realize and understand that, then we can move forward with trying to fix the problem."