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Letter: There are ways to reduce water, sewer rates

February 1, 2019

The City of Rehoboth Beach is considering water and sewer rate increases. Unfortunately, we are at a point in time where water and sewer rate increases are becoming commonplace. Water and sewer rates have increased above the rate of inflation, and there is no end to the increases in sight.

A big reason for the rate increases is the need to fix crumbling water and sewer infrastructure. There is no way to avoid taking care of this problem - the public can do without many things; however, water and sewer services are not one of them. In modern society, we need water and sewer services.

So, we are all going to have to accept rising water and sewer infrastructure costs as a fact of life. However, we should expect our leaders to apply basic business principles to address this problem. In business, when your costs increase you have three options: (1) raise prices (or rates in this case), (2) reduce costs, or (3) both. Yet, there are only discussions about rate increases. There is no public discussion about how to reduce costs.

Perhaps, the reason why reducing costs is not discussed is because it normally means cutting staff or cutting staff pay. That is painful to employees, can be politically difficult, and usually involves hiring expensive consultants to analyze the staffing levels to determine where and how to make the cuts.

There is another way to reduce costs that does not involve cutting staff or cutting staff pay. Water and sewer utilities can save money by simply working together. Water and sewer utilities are pretty much doing the same thing and buying the same parts, pipes, equipment and chemicals.

Why don’t water and sewer utilities work together to see what they buy in common and buy those items in bulk as a group?

Basically, it is because of fragmentation. America has over 70,000 water and sewer utilities and they all operate as separate entities. There has been no way to tie the utilities together on a single platform so that they could work together to reduce costs.

Now, there is a platform that enables utilities to work together to reduce costs for the benefit of ratepayers. H2bid Parts (www.h2bidparts.com) is an innovative platform that is now being used by many utilities in America to save time and money on parts and materials. The platform ties utilities together in a virtual community. With utilities tied together on a single platform, they can reduce costs and improve efficiency in the following ways:

• Save time and money on parts and materials.

• Manage material standards more efficiently and communicate changes (new standards, specifications, approved materials) in real time to internal staff and suppliers.

• Engage in group purchasing for lower prices on items commonly purchased by the City of Rehoboth Beach and other utilities and municipalities.

• Monetize surplus items (also save by purchasing surplus items from other utilities and municipalities).

• Prepare routine multi-item requests for a quote in minutes (rather than days or weeks), allow suppliers to respond electronically and automatically tabulate supplier responses.

•  Improve resiliency preparation - get needed parts from other utilities after a disaster more easily.

• Benchmark prices and best practices in real time (regarding parts and materials used by other municipalities and municipal utilities).

• Increase competition and get better pricing from suppliers.

• More easily locate and track the use of diverse suppliers.

• Reduce professional services costs.

• Provide a means to communicate with purchasing and engineering staff at other municipalities and utilities.

In seeking a rate increase, the City of Rehoboth Beach can make a more compelling case to the public if it said that it was working with other municipalities and utilities to reduce costs for the benefit of ratepayers. It certainly is an idea whose time has come.

Glenn D. Oliver
H2bid Inc.
www.h2bidparts.com
goliver@h2bid.com

 

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