DISCRIMINATION IN SERVICE

The word "discrimination" can be emotionally charged, particularly when used in racial, religious, nationality and similar contexts. In such settings, a legal prohibition against discrimination generally tends to be absolute.

In the public utilities world, a prohibition against "discrimination" also can be applicable. Typically, such discrimination can arise in two situations: (1) establishment of rates and (2) extension of service.

However, in the public utilities world, not all discrimination necessarily is illegal. Discrimination can be reasonable or just-a legal discrimination.

A future posting will discuss rate discrimination. An Illinois Appellate Court decision will illustrate a claim of service discrimination. (Schroeder v. City of Grayville, 520 NE2d 1032 (5th Dist. 1988)

Plaintiffs were non-residents of a city. In their complaint, they accused the city of discrimination because it refused to supply water to their property located outside the city limits. Plaintiffs alleged that refusal to extend water service to their property was in retaliation to their prior refusal to grant an easement requested by the city. The complaint alleged that the city improperly discriminated against plaintiffs because the city had supplied water to other non-residents similarly situated.

Plaintiffs argued that a city owning and operating a water system does so in its business or proprietary capacity and is obligated to refrain from unreasonable discrimination against persons similarly situated. The city argued that it had no duty to provide water to non-residents in absence of a contractual undertaking obligating it do so.

The Appellate Court noted established caselaw that a municipality owning and operating a water system is no different than a private water utility; and that private utilities are prohibited from engaging in unreasonable discrimination in rates or manner of service. The Court concluded that "the reasoning in these cases supports plaintiffs' claim that defendants' refusal to provide them water, while providing water to others similarly situated, is an unreasonably discriminatory manner of service." (Id. at 1034)

Arguably there may be circumstances where a municipality can refuse service to non-residents without bumping into a discrimination issue. For example, a city may have a firm policy requiring a non-resident to enter into an annexation or pre-annexation agreement. Or a city may not have sufficient "backbone" plant capacity to take on additional non-resident customers. Or the city may not have distribution facilities in proximity to the non-resident land and, therefore, requires payment for an extension of lines, for which the non-resident is unwilling to pay. The point is that establishing the existence of unreasonable discrimination in service is not always a simple matter.

GOOD TO THE LAST DROP

Recently, I attended an estate auction held in a farm yard surrounded by hovering corn stalks, mysterious metal storage structures and biting flies. Several generations of possessions were piled upon farm wagons awaiting eager bidders. On one of the wagons, I spied two cast iron water hand pumps, one red, the other green.

When a ring man held up the green one for the auctioneer to start his chant, the ring man pumped the handle up and down as if he were pumping water at a sink in an imaginary farm kitchen. But, of course, there was no water to be pumped--only the dusty air of the farm yard. At that moment, I wondered what it would be like if my pump or faucet were dry and produced only air. Many parts of this country as well as other parts of the world face that prospect.

But, alas, there WAS water to be had at the auction, though at a significant cost. A food vendor squeezed within a small trailer next to the auction site was selling bottles of drinking water for about $1 each. That works out to be about $8 per gallon or $8,000 per 1,000 gallons.

What is the point? There are two points to be made. First, safe drinking water increasingly is becoming a scare commodity, particularly as demand grows across the world.

Second, to deliver safe drinking water to our hand pumps and faucets costs more and more as time goes on. In August, Black & Veatch issued the findings of its sixth "50 Largest Cities Water and Wastewater Rate Survey." The survey found that the average annual increase in typical residential water bills from 2001-2009 was 5.3%, and for residential sewer bills, 5.5%. These annual increases were more than twice the average annual CPI-D increases of 2.4%. (See www.bv.com/top50ratesurvey)

According to Black & Veatch's analysis of the survey, causes for the bill increases included:

1. Increases in operating and maintenance expenses, such as for electricity and chemicals.

2. Lower usage, and corresponding lower revenue to cover fixed costs such as debt service.

3. Pension and health care benefits.

4. Regulatory and legal requirements.

5. Aging infrastructure, requiring replacement and upgrading.

To the list, I would add the "scarcity factor." In some areas, ground water supplies are diminishing and surface water supplies are becoming less reliable or more costly to utilize. Utility systems are being compelled to search for alternative supplies, which may involve construction of transmission pipelines or more extensive treatment facilities.

No, I did not bid on either hand pump, nor did I buy a bottle of water. I journeyed home thirsty but more appreciative of the glass of cool water from my faucet. It really was good to the last drop.