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Will a commission quell public fears of misspent utility funds?

City Commissioner Nick Fish insists he’s already responded to repeated accusations of mismanagement of the Portland Water Bureau and Bureau of Environmental Services. But Fish says that he’s prepared to do even more, beginning with the appointment of a blue-ribbon commission to review the City Council’s oversight of the two bureaus within a couple of weeks.

“The goal is to have any recommendations for changes presented to the council by fall,” Fish says. “I predict it will be a contentious process, but a necessary one.”

Fish and Mayor Charlie Hales promised to appoint the commission during the recent fight over the ballot measure to transfer control of the two bureaus to an independently elected Portland public water district. Although voters overwhelmingly defeated the measure at the May 20 primary election, Fish says water and sewer ratepayers still want both bureaus reformed.

“The message I got was, Portlanders are upset about their rates, they thought the measure was flawed, and they expect the council to fix the problems,” says Fish.

Indeed, criticism of the council’s management of the bureaus continued after the vote. Two days later, Janice Thompson, a consumer advocate for the statewide Citizens' Utility Board, told the council it needs to convince ratepayers their money is being spent wisely and efficiently.

Speaking at the final public hearing on next year’s rates, Thompson said, “The City Council has spent dollars from public utilities in ways that were not in compliance with the City Charter.”

CUB is a statewide consumer watchdog organization that has historically reviewed and responded to rate increase requests by private utility companies, including PGE, PacifiCorp and Northwest Natural. Fish and Commissioner Steve Novick convinced the City Council to approve a five-year contract with CUB to provide similar reviews and responses to the water and environmental services rate requests several months ago.

During the May 22 rate hearing, Thompson didn’t say whether the 4.9 percent rate increases approved by the council were justified. But she noted that Fish had promised to keep a “tight rein on rates” and forced the bureaus to reduce their budget requests to keep the increases under 5 percent for the second year in a row.

Fish is not pledging to reduce rates, however. “I am committed to stabilizing rates, but I can’t promise to ever propose a negative increase,” Fish says.

In fact, Thompson questions whether the council can keep the rate increases that low in coming years, however.

“There will be serious challenges since the major drivers of water and wastewater rate increases are environmental regulations and infrastructure maintenance and replacements,” Thompson said during her testimony.

Future rate increases

Fish says he cannot promise to keep future rate increases under 5 percent, a sharp reduction for the years of double-digit increases approved by the council, in large part to fund the $1.4 billion Big Pipe project that has all but eliminated sewer discharges into the Willamette River. Current major projects include the construction of the new Powell Butte and other underground storage tanks to replace the open reservoirs in Mount Tabor and Washington parks. A new earthquake-resistant water pipe across the Willamette River is also planned. And the city’s final bill for the Portland Harbor Superfund cleanup is still unknown.

Fish is firm that since being assigned the bureaus last year, he has taken steps to keep rate increases as low as possible. They include selling the controversial Water House as proof of his opposition to pet projects, holding the first-ever council rate review hearing and council work session on the bureaus’ Capital Improvement Plans, and requiring more construction cost increases to be publicly discussed by the council.

Next steps include both short term and long term reforms, Fish says.

In addition to the appointment of the blue ribbon commission, short term reforms include working with the city auditor’s office to increase oversight of capital projects. Long-term goals include selling more Portland water to suburban customers to increase the water bureau’s funding base.

“Perhaps the most effective strategy for stabilizing rates is selling more water to more customers,” Fish says.

And Fish says he hopes to reinforce the council’s relationship with CUB in the near future.

‘Tough love’

In her testimony, Thompson listed a series of ongoing issues that CUB believes the council needs to address. Among other things, she said the council should appoint a Construction Oversight Committee to advise it and the public on the management of capital projects. Speaking about the reported leaks discovered at the new Powell Butte Reservoir that is still under construction, Thompson said CUB could not determine whether such leaks are common problem with such projects, as water bureau officials say, or whether they are unusual and require special attention.

Thompson also said the public education campaigns being conducted by both bureaus about environmental issues need to be assessed to ensure they are achieving their goals in a cost-effective manner. And Thompson said the council should consider charging rates that more accurately reflect the cost of providing services to water and sewer customers.

Fish called Thompson’s testimony before the council “tough love,” saying she offered fair criticisms while also proposing potential reforms that hold long-term promise.

“This is a big reform effort and it’s going to happen over many years, but we’ve made a good start and I am committed to seeing it through,” says Fish.

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