Recent commentary has focused attention on the Clean Rivers Impervious Area Charge (CRIAC) that is part of the bill that retail customers in the District of Columbia receive from DC Water.  We offer the following analysis to help clarify the purpose, structure and history of the CRIAC, and to summarize DC Water’s plans to evaluate the current status of this charge.

First, to outline the background of the DC Clean Rivers Project:

• DC Water is mandated by a consent decree entered in the Federal District Court under the Clean Water Act to implement a mammoth program to resolve water pollution challenges. These challenges stem from a combined sewer system designed and built by the federal government over a century ago.  
   
• A combined sewer handles both sewage flow from retail residential, multi-family and commercial customers in the District and stormwater flow that enters the same pipes from storm drains in the street. Under most circumstances, these combined sewers can handle the sewage and rainfall that is directed into these large sewers. However, in bigger rainstorms, the pipes are completely filled and overflows are triggered – both to all three large waterways that flow through the District (Potomac and Anacostia Rivers, and the Rock Creek) and sometimes into District streets and basements. The release of this combination of sewage and rainfall – called a combined sewer overflow – causes a public health hazard to all the people that live, work and visit the District, as well as all other living organisms in our environment.  
   
• Combined sewers are not unique to the District of Columbia. Nearly 800 cities across the country, primarily in the east and Midwest United States, have combined sewers and most are implementing programs to eliminate overflows from these antiquated systems.  
   
• The Clean Rivers Project provides three main benefits to all ratepayers in the District:
  
  • Cleaning up sewage overflows – the project will reduce combined sewer overflows by 96 percent overall with a 98 percent reduction for the Anacostia River.  This will bring the sewer system into compliance with the District’s water quality standards and will essentially remove CSOs as a source of pollution to District waters.  The rivers will be cleaner and will have less trash.
  • Providing flood relief – The project will alleviate chronic flooding of basements and streets that has plagued the Northeast Boundary area for many decades.  The extreme flooding in Bloomingdale and LeDroit Park in 2012 and the recent flooding of August 12, 2017 are examples of what the project will address.
  • Helping to clean up the Chesapeake Bay – the project will reduce peak flows to the wastewater treatment plant at Blue Plains allowing a more cost effective nutrient removal system.  Nutrient removal at Blue Plains is another Federal mandate required to help clean up the Chesapeake Bay.  
     
• The sewer system in the District began to be constructed in the 1870s, nearly 150 years ago. The sewer system was predominately built by the Federal Government under the auspices of the Army Corps of Engineers.  After home rule in 1972, the District inherited the sewer system and the problems that go along with it including sewer overflows and flooding. We are now required to resolve problems that were created and have lingered for nearly 150 years in the short time span of 25 years (about a generation) as mandated by the Federal Consent Decree. Given that the Federal Government constructed the sewer system and then turned it over to the District residents, it is important that the Federal Government pay their fair share of the legacy costs to correct the deficiencies in the system. Federal installations in the District of Columbia pay the CRIAC charges billed by DC Water.  
   
• The consent decree, signed by the US Environmental Protection Agency, US Department of Justice, the District of Columbia and DC Water, mandates a program – which DC Water calls the “DC Clean Rivers Project.” This project is designed to alleviate combined sewer overflows by building a system of underground tunnels, and green infrastructure at the surface, to contain and capture these overflows so they can be directed to DC Water’s world class treatment facility at Blue Plains. The Clean Rivers program is subject to strict performance milestones under the consent decree. The cost of the program was estimated at $2.6 billion in 2005, and requires significant construction work over 25 years until 2030. The District of Columbia has the nation’s highest per capita cost for a combined-sewer consent decree project.  
   
• As part of the development of the Clean Rivers project, more than 50 different alternatives were evaluated and ultimately rejected as being inferior to the selected plan for a variety of reasons. They were more expensive – from $3.5 to $9.5 billion – and had other significant disadvantages including: requiring a large amount of property; taking space currently used for parkland or recreation; would be difficult or expensive to operate and maintain; and would be extremely disruptive to the community during construction.  
   
• Because DC Water is a ratepayer-funded enterprise, the Clean Rivers program must be paid for by our retail customers. DC Water’s suburban wholesale customers, including Montgomery and Prince Georges County in Maryland and Fairfax and Loudon County in Virginia, pay for the portion of the Clean Rivers Project they use (up to 7.1 percent).  This is a relatively low percentage because none of the combined sewers that are causing the problems are located in the suburban jurisdictions. DC Water aggressively seeks federal appropriations to help cover the cost of upgrading the combined sewer system – but must seek funding every year.  In past years DC Water has received relatively small appropriations.  For example, in 2017, DC Water received a $14 million federal appropriation while at the same time expending $216 million on the Clean Rivers Project to meet strict milestones and deadlines. This funding gap leaves the vast majority of costs associated with Clean Rivers covered by retail customers in the District of Columbia. 

Second, to outline the background of the Clean Rivers Impervious Area Charge:

• DC Water started to develop a plan to pay for the enormous costs associated with the mandated Clean Rivers work in 2007. After thorough evaluation, two main approaches were considered.  One approach was to include the cost of the Clean Rivers Project in the sewer rate because the work is essentially expanding the capacity of the sewer system to handle additional stormwater flow. On the other hand, the sewer bill is premised on a volumetric use of water and sewage generation, not on the generation of stormwater that is triggering the need for the program.  The alternative approach was to create a new fee based on the impervious cover on every parcel of land in the District. Impervious surfaces are hard surfaces that cause stormwater to run into combined sewers and storm drains. This is the very challenge that the Clean Rivers Project is designed to meet.  
   
• Because impervious surfaces are closely related to the amount of stormwater conveyed in combined sewers, impervious cover is used as a surrogate to approximate the respective contributions made by the many properties in the District of Columbia to the storm water that will be managed by the Clean Rivers Project. In 2008, the Board of Directors of DC Water decided to fund the Clean Rivers program using a fee associated with the amount of impervious cover on the property of each customer. This fee is the Clean Rivers Impervious Area Charge (CRIAC) that is the subject of current discussion.  
   
• The CRIAC is determined by aerial mapping and assessment of each lot in the District.   Aerial mapping is conducted every several years by the District Department of Energy and the Environment. DC Water assesses each lot for the scale of impervious cover on that lot – and then calculates a fixed fee that is charged to that lot. Lots with larger amounts of impervious cover, which also generate large amounts of stormwater, are charged a higher fee.  
   
• For residential customers, lots are classified into six tiers based on the scale of impervious cover.  Most residential lots in the city are in the tier charged one ERU – or equivalent residential unit (averaging 1000 feet of impervious cover). DC Water has one tier smaller than 1 ERU for smaller lots, and five tiers larger for bigger lots. This arrangement implements the approach of higher payments for larger lots and more impervious cover, and smaller payments for smaller lots.  
   
• For commercial and multi-family customers, the ratepayer is charged a rate that is calculated based on the actual square footage of impervious cover on the lot.  
   
• The CRIAC first appeared on DC Water customer bills on May 1, 2009 and started at a low rate of $1.24 per ERU – because the project was in its earliest stages. Some customers have noted that this charge did not exist before 2009 – which is correct. Prior to 2009, relatively small expenditures associated with the Clean Rivers Project were included in the sewer rate, which was based on a customer’s water usage. Since 2009, the Clean Rivers Project has been exclusively funded by the CRIAC and what appropriations were made available by Congress.    
   
• The CRIAC has escalated rapidly over the years because DC Water has shouldered the massive costs associated with constructing huge underground tunnels and the green infrastructure required by the consent decree. By 2018, the CRIAC had increased to $25.18 per ERU, from the initial $1.24 per ERU in 2009. Because the Clean Rivers Project will continue until 2030, the CRIAC will continue to rise in the years ahead to cover the costs of this work.

Third, with respect to the issues raised in recent reports in the media and plans to evaluate the current status of the CRIAC:

• All of the revenue raised goes to fund work for the benefit of public purpose. DC Water is a non-profit, public agency that is predominantly funded by ratepayer funds, with no other significant funding source. This reality and the legal requirements imposed by the consent decree have motivated DC Water to determine the most balanced and accurate approach to raising the funds required. The hard reality that is that the work must be paid for by a system of rates and fees that allocates the costs attributable to the environmental improvements to the District’s waterways to DC Water’s customers.  
   
• By design, customers with larger lots and more levels of impervious area are charged a higher fee under the CRIAC. Many churches and other customers with larger parking lots and buildings have seen their CRIAC charge increase significantly since 2009.  There are a small number of religious institutions that are associated with much larger lots and cemeteries that have received significantly higher bills due to the CRIAC.  
   
• Costs associated with the Clean Rivers Project are known, and for the most part, fixed. The fixed nature of the costs means that reducing the charges allocated to any one group of customers will increase the costs allocated to all of the other customers.   
   
• DC Water’s Board is very concerned with the fairness of the rates and fees charged by DC Water to our retail customers. The Board has mandated a comprehensive program to support low income customers, which was expanded in the last year to include a 50 percent reduction to the CRIAC to customers who are eligible for assistance under income guidelines set under the Low Income Home Energy Assistance Program (“LIHEAP”) administered through the District Department of Energy and Environment (DOEE). DC Water’s Board has also modified and reduced fees assessed to residential customers for drinking water infrastructure after the issue of mandatory fire suppression was brought to its attention.  
   
• DC Water’s Board has asked staff to assess the status and fairness of the CRIAC as it has unfolded over the last ten years, with particular attention to certain non-profit customers – most notably those with larger lots that therefore trigger larger CRIAC charges. This assessment is ongoing, although has been hampered in part by a difficulty in identifying and accurately calculating the number and scale of entities that are part of the non-profit category. DC Water has three customer classes – residential, multi-family and commercial – and has not systematically collected or analyzed the subcategory of non-profits. Nevertheless, staff is working hard to do so, while in the middle of an on-going program to update our Customer Information System to enable just this type of analysis.  
   
• DC Water’s staff intends to formalize these efforts in a rate study to evaluate whether modification to the scope and method of assessing the CRIAC charge are appropriate.  Examples of items to be considered include:
  
  • Present to the DC Water Board Retail Rates Committee an analysis of affordability and hardship programs in comparable utilities
  • Assess the overall fairness of the CRIAC fee
  • Review available alternate or additional sources of funding
  • Assess the feasibility of establishing a system wherein customers can implement measures to reduce runoff from their property and thereby reduce the CRIAC charge.

We emphasize that we all need to recognize that any changes to the program are in effect a zero-sum game. The costs to comply with Federal mandates and to provide the flooding relief and other benefits are in essence fixed.  Changes to how the CRIAC is structured will need to generate the same amount of funding and any reductions for some portion of the customer base will result in increases for other customers. Within this context, the Board and staff of DC Water are committed to a rate and fee structure that is both fair to our customers and that raises the necessary funds to undertake work that is vital to the health and well-being of our city and region.

For more detailed information, please visit our website pages on Rates and Metering and the Impervious Area Charge.