Friday, May 19, 2006

The "Joy" of Regulated Monopolies

My May water bill was pretty ridiculous. The amount due was $6.81. I wish it were that amount every month, but because it isn't, I started looking over the bill. I found that the amount of water consumed in the billing period was -1 cubic ft.

-1? If I didn't consume any water, why I am being billed?

I called the 1-800 number. I'm always very polite with the phone staff because they're just doing their jobs and aren't the ones setting policy. So, I finally got a live human being and began asking questions.

Q: Why is my consumption -1?
A: Because the previous month's bill was an estimate. They were so far off with the estimate that you consumed less in two months than they figured you would in one month.

Q: So, if it's -1, why am I getting a bill?
A: Because you have to pay the base charges.

Q: Fair enough. What are the base charges?
A: Meter rental, taxes, regulatory fees.

Q: Fair enough. So I am renting my water meter?
A: Yes.

Q: OK, it seems that a water meter should cost about a hundred bucks. At $6/month, I'm paying for a water meter a year, which is ridiculous. I'd like to purchase my water meter. How do I do that?
A: You can't do that.

Q: What do you mean I can't do that? I've got the money. Let me buy the meter.
A: We do not permit customers to purchase a water meter.

Q: So, I am compelled to rent it, even though that's costing me money for no good reason?
A: Yes.

Q: You know- I don't like that one bit.
A: I know, sir. People tell us that all the time.

So, I thanked her for her assistance. She doesn't set policy for Veolia/Indianapolis Water. The water company does that with the blessing of the Indiana Utility Regulatory Commission, and in this case, does so knowing that I have virtually no other choice, unless my property can support a well. But then, I'm living within municipal limits, and I am compelled by municipal code to have city water.

$6/month =
$72/year =
$720 / 10 years, in exchange for no particular value, and because the water company not only is absent competition, but granted authority by law to set rates and policies in this way.

While $6/month may not seem like a lot, factor $6 x 100,000 customers for Indianapolis (there are probably way more than that in a city of 800,000+, and you can see the scale of the theft that is taking place.

It wouldn't be this way if multiple water companies were operating and offering their services in competition, because the first one to allow me to buy the meter would get my business on the basis of the savings. The water meter used in my house can be purchased online at a cost of $153.06, I'd recoup in 26 months. After that, I'm money ahead. Since I plan to live in my house for a long time to come, I would do this in a heartbeat.

Alas. We see that it doesn't matter whether a monopoly is a market creation or a government creation. Limited choice always harms the consumer.

-Mike Kole


Robert Enders said...

Is this Kole typing this? It isn't readily apparent who is typing this, but I know for a fact that Sylvester has Aquasource water at his house.

Robert Enders said...

By the way, our shiny new trash cans that the City of Fort Wayne requires us to use? We have to rent those as well. We cannot buy them.

The Conservative UAW Guy said...

Well, don't look at it as rent, just look at it as another tax.

Feel better?


Actually, it's pretty sad, isn't it...

Mike Kole said...

Sorry! It's me. I'm not in the habit of signing my name at the bottom of posts to my own blog. I'll add my mae to this!

Bartleby said...

It couldn't be Sylvester -- no random capitalizations in the middle of sentences. I believe I detected a few semicolons, too.

Dick in the Dirt said...

Great post. It seems that giving the option of purchasing the water meters would do good for the utility as well because the cost of repair and maintenance would be on the consumer, not the utility.

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