[Federal Register Volume 75, Number 33 (Friday, February 19, 2010)]
[Proposed Rules]
[Pages 7411-7412]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-3219]
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DELAWARE RIVER BASIN COMMISSION
18 CFR Part 410
Schedule of Water Charges
AGENCY: Delaware River Basin Commission.
ACTION: Notice of proposed rulemaking and public hearing.
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SUMMARY: The Delaware River Basin Commission will hold a public hearing
to receive comments on proposed amendments to the Administrative
Manual--Part III--Basin Regulations--Water Supply Charges to revise the
schedule of water charges.
DATES: The Commission will hold a public hearing on Tuesday, April 13,
2010, beginning at 1:30 p.m. The hearing will continue until the later
of 3:30 p.m. or such time as all those who wish to testify have been
afforded an opportunity to do so. Written comments will be accepted
until 5 p.m. on Friday, April 16, 2010.
ADDRESSES: The hearing will take place in the Goddard Room at the
Commission's office building, located at 25 State Police Drive, West
Trenton, New Jersey. Driving directions are available on the
Commission's Web site--http://www.drbc.net. Please do not rely on
Internet mapping services as they may not provide accurate directions
to the DRBC.
Written comments may be submitted at the hearing and may also be
sent as follows: via e-mail to [email protected];
otherwise, to the attention of the Commission Secretary, DRBC, either
by fax to (609) 883-9522; U.S. Mail to P.O. Box 7360, West Trenton, NJ
08628-0360; or delivery service to 25 State Police Drive, West Trenton,
NJ 08628-0360. Regardless of the method of submission, written comments
should include the name, affiliation (if any) and address of the
commenter and the subject line ``Schedule of Water Charges.''
FOR FURTHER INFORMATION, CONTACT: Please contact Paula Schmitt at 609-
477-7224 or Katharine O'Hara at 609-477-7205 with questions about the
public hearing.
SUPPLEMENTARY INFORMATION: Background. In response to the need to fund
certain water supply storage facility projects, the Commission between
1964 and 1974 established a system of water supply charges pursuant to
section 3.7 of the Delaware River Basin Compact. In December of 1964,
it adopted Resolution 64-16A, ``A Resolution to establish policy
concerning water supply in federal projects authorized in the
Comprehensive Plan.'' This resolution established a revenue stream to
repay the obligations the Commission eventually assumed to purchase
capacity at the federal government's Beltzville and Blue Marsh water
storage facilities. The resolution specifically provided that the debt
for DRBC's share of storage in these facilities would be repaid through
the sale of water (or other products and services) and through an
apportionment of the costs to the states benefiting from those
projects. See Resolution No. 64-16A, adopted December 29, 1964 (adding
to the Comprehensive Plan a ``Section IX--Water Supply Policy'', par.
3.a. and b. of which establish the described debt repayment
mechanisms).
The Commission subsequently adopted Resolution No. 71-4, ``A
Resolution to amend and supplement the Comprehensive Plan by the
addition of a new article on policy for water supply charges.'' This
resolution established a schedule of rates for basin water withdrawals
and provided that the ``charges for water supplied will include all
costs associated with making basin water supply available and
maintaining its continued availability in adequate quantity and quality
over time.'' Res. No. 71-4, adopted April 7, 1971, par. A.2. Resolution
No. 71-4 requires the Commission to collect sufficient annual revenue
to meet all annual project costs, ``including debt service, operation,
maintenance, replacement, reserves, and associated administrative
costs.'' Res. No. 71-4, par. A.2.b. The Commission recognized that the
waters of the basin formed a ``unitary system'' and thus applied the
charges to water withdrawals made throughout the basin, including up-
stream of Commission facilities. See Res. No. 71-4, preamble. The
unitary system is sometimes referred to as the ``pooled water'' theory.
See, for example, Delaware River Basin Commission v. Bucks County Water
& Sewer Authority, 641 F. 2d 1087, 1094 (3rd Cir. 1982) (citing Borough
of Morrisville v. Delaware River Basin Comm'n, 399 F.Supp. 469, 471
(E.D. Pa. 1975), aff'd per curiam, 532 F.2d 745 (3d Cir. 1976)).
Resolution No. 71-4 imposed charges only on withdrawals from surface
waters of the basin. In accordance with Section 15.1(b) of the Compact,
it limited charges to the amounts of water withdrawn in excess of those
``that could lawfully have been made without charge on the effective
date of the Compact.'' Compact Sec. 15.1(b).
The Commission has historically placed the revenues generated
through the sale of water in an account called the ``Water Supply
Storage Facilities Fund'' (``Storage Fund''). The Storage Fund holds
funds dedicated to pay the costs of project construction, operation,
maintenance, and replacement, as well as associated administrative
costs. See Res. No. 71-4, par. A.2. The estimated balance in the
Storage Fund as of June 30, 2009 was $12.1M. A snapshot of the Storage
Fund at the close of fiscal year ending July 31, 2009 shows the
following: The Storage Fund received approximately $2.6M in water sale
revenue. It disbursed or incurred approximately $2.2M in expenses,
consisting of approximately $483K in interest paid to the U.S.
Treasury, $423K in asset depreciation, $310K for operations and
maintenance of the Blue Marsh and Beltzville projects, $86K for
contractual services from the U.S. Geological Survey for operation and
maintenance of stream gauges, and $933K associated with Commission
administration. The fund lost $153K on investments (the sole Storage
Fund investment loss in 35 years). The approximately $204K difference
between the annual costs and revenue is retained in the Storage Fund as
a reserve against the future costs of expected significant repair to
the facilities.
Historically, the Commission has not charged its full
administrative cost against the Storage Fund. Periodic reviews of the
charges have shown that the costs involved in Commission activities
properly chargeable to the Storage Fund have exceeded the amounts
actually charged for many years. To the extent that the Storage Fund
has not been charged its full allocable costs, contributions by the
signatory parties of the Delaware River Basin Compact (the states of
Delaware, New Jersey, New York, Pennsylvania and the federal
government) have made up the difference. In extremely challenging
economic times, however, the signatories find themselves less capable
of assuming this burden. In fiscal year 2010, an adjustment was made to
better align charges to the Storage Fund with actual costs. Even absent
this adjustment, the trend evident since 2008 is that retained Storage
Fund earnings have leveled off.
[[Page 7412]]
Recent plant closures in the basin are expected to result in reductions
of approximately $500K annually (about 20 percent) in water sale
revenues, while the costs of reservoir maintenance and operations,
contractual services and administration continue to rise.
DRBC's Current Schedule of Water Charges. Resolution No. 71-4
provided that water rates would consist of ``the weighted-average unit
cost of all water stored by or on behalf of the Commission'' and
specified that the unit cost of all water would be determined ``by
dividing all of the commission's annual project cost by the net yield
of the water supply in federal reservoirs authorized in the
commission's Comprehensive Plan.'' Res. No. 71-4, par. A.2.a. Also see
Res. No. 78-14, preamble.
In accordance with this formula, the current schedule of water
charges was established by Resolution No. 78-14 in October of 1978,
based on the unit cost of water stored by the Commission in the
Beltzville and Blue Marsh reservoirs. It was codified at section 5.3.1
of the Commission's Administrative Manual--Part III--Basin
Regulations--Water Supply Charges (hereinafter, ``WSC''). Section 5.3.1
provides that the Commission ``will from time to time, after public
notice and hearing, make, amend and revise a schedule of water
charges'' and that until changed, the charges for water shall be $.06
per thousand gallons for consumptive use ($60 per million gallons) and
six-tenths of a mill per thousand gallons ($.60 per million gallons)
for non-consumptive use. WSC Sec. 5.3.1. These rates which have remain
unchanged for more than 30 years, lag far behind the rates charged for
raw (untreated) water by the Commission's sister agency the Susquehanna
River Basin Commission (SRBC) and by the New Jersey Water Supply
Authority (NJWSA) for raw water from its Raritan System.
The consumptive use rate established by SRBC in May of 1992,
effective January 1, 1993, was $140 per million gallons, nearly two-
and-a-half times the current rate charged by DRBC. In June of 2008,
SRBC approved a two-step increase to $210 per million gallons effective
January 1, 2009, and $280 per million gallons (more than four-and-a-
half times DRBC's current rate) effective January 1, 2010. NJWSA
charged $216 per million gallons as of July 1, 2010 and will charge
$220 per million gallons (more than three-and-a-half times DRBC's
current rate) as of July 1, 2011, for raw water from its Raritan
System. DRBC's proposed 2010 and 2011 rates for consumptively used
water remain well below those of its counterparts.
Proposed Rate Increase. Resolution No. 71-4 provided that
``[c]osts, rates and charges will be recomputed * * * as often as
necessary to reflect relevant changes in any cost components associated
with sustaining specific base flows.'' Res. No. 71-4, par. A.2.a. At
this time, in order to maintain net income to the Storage Fund and
ensure financial stability to address future operating and maintenance
costs, the Commission is proposing its first water charging rate
increase in 32 years. Because many people find the expression of the
rates confusing, the Commission also is proposing that the new rates be
established per million gallons rather than per thousand.
In light of the difficult economic climate, the rate change is
proposed in two stages. The proposed rates, calculated using the
formula established by Resolution No. 71-4 and set forth above, are as
follows: The consumptive use rate is proposed to be increased from $60
to $90 per million gallons effective on January 1, 2010, and from $90
to $120 per million gallons effective on January 1, 2011. The non-
consumptive use rate is proposed to be increased from $.60 to $.90 per
million gallons effective on January 1, 2010, and from $.90 to $1.20
per million gallons effective on January 1, 2011.
Even with the proposed increases, Delaware Basin water will remain
inexpensive when compared to raw water in neighboring jurisdictions.
Notably, the proposed 2012 rate of $120 per million gallons for raw
water consumptively used in the Delaware Basin is less than half the
rate of $280 currently in effect in the Susquehanna Basin and only a
little more than half the rate of $216 currently charged by the NJWSA
for its Raritan System water, which rate will increase to $220
effective January 1, 2011. The Commission's proposed 2012 rate is below
the current (2010) rate of $60 per million if adjusted for inflation,
which would be approximately $200 per million gallons.
No Change to Exempt Uses. No change to the list of uses exempt from
charges, as set forth at WSC Sec. 5.3.3 is proposed. The following
categories of uses are currently exempt from water charges: Non-
consumptive uses of less than 1,000 gallons a day and less than 100,000
gallons during any quarter (Sec. 5.3.3 A.); ballast water used for
shipping purposes (Sec. 5.3.3 B.); water taken, withdrawn or diverted
from streams tributary to the River Master's gauging station at
Montague, New Jersey (Sec. 5.3.3 C.); and water taken, diverted or
withdrawn below the mouth of the Cohansey River and such proportion of
water withdrawn above that point and below the mouth of the Schuylkill
River as the Executive Director may determine would have no discernable
effect upon the maintenance of the salt front below the mouth of the
Schuylkill River (Sec. 5.3.3 D.).
Pamela M. Bush,
Commission Secretary.
[FR Doc. 2010-3219 Filed 2-18-10; 8:45 am]
BILLING CODE 6360-01-P