ALLOCATION OF A REVENUE DOLLAR
Metro Water Services operations are supported by its rate revenues (water bills payments, fees, etc.). Though a department of the Metropolitan Government of Nashville and Davidson County, Metro Water Services receives no tax revenues. The rate revenues must provide enough money to cover operational expenses, pay the debt service (interest and principal) on revenue bonds, and adequately maintain and replace facilities as needed. Annually, private consultants examine our expenses of operation and repaying revenue bonds (debt service) to determine our water and sewer rates.
Operation Expenses are the day-to-day expenses for operating and maintaining the water and wastewater facilities. Improvements to Facilities (Water or Sewer) provide money for keeping up with increasing demand by expanding the facilities and replacing outdated and worn equipment. Debt Service (Water or Sewer) is the repayment of loans used to pay for water and sewer improvements.
This
chart portrays how each dollar of revenue is used. Note that 62¢
of each dollar pays for sewer related expenses.
Allocation of a Revenue Dollar
| How Dollar is Spent | Amount of Dollar Spent |
|---|---|
| Water Debt Service | $0.11 |
| Water Operations | $0.17 |
| Sewer Operations | $0.24 |
| Sewer Debt Service | $0.15 |
| Improvements on Sewer Facilities | $0.23 |
| Improvements on Water Facilities | $0.10 |
WHY SEWER RATES ARE HIGHER THAN WATER RATES
The difference in water and sewer rates is due to the fact that sewage treatment is much more expensive than water treatment.
Nashville's original sewerage system, constructed over a century ago, discharged directly into the Cumberland River. Designed as a combined sewer system, it was meant to accommodate both wastewater and stormwater runoff. After the city began treating its sewage in 1958, only the overflow brought on by heavy rains was dumped into the river.
In March 1990, the Tennessee Department of Environment and Conservation issued an order requiring extensive studies of sewer problems and the development of a plan that could meet the schedule for sever overflow elimination. The Sewer Overflow Abatement Program, the result of environmental concerns and new regulations, represents a departure from the historic processing method that allowed untreated sewage to bypass the treatment plant during rainfall events that overloaded the century-old combined sewer system Nashville’s downtown area.
The projected total cost of the state order, including planned capital improvements to the water and sewer system and facilities, is approximately $750 million. A portion of these costs was financed by issuing municipal bonds that must be paid back. This arrangement has resulted in higher sewer rates than water rates. Nashville has an excellent water and wastewater treatment program, and MWS meets and often surpasses environmental regulations while providing water and wastewater treatment that is vastly superior to other areas.
Continuing to be proactive will save money in the future.
Questions which are not addressed through this web site, please email Sonia Harvat.