ST. LOUIS • When Anheuser-Busch cut water use here by 540 million gallons this past year, saving nearly $400,000, Earl Lee Young could do nothing but watch his utility bills rise.
Young, 65, a city resident on Social Security, is particularly concerned about water costs.
"Every year it's been going up!" exclaimed Young, after a 12 percent hike in July. In 2004, his annual bill was $180. In the coming year, it will be more than $270. "In six years, that's a pretty hefty increase. I just get hit from all sides."
Businesses across St. Louis, and across the country, are saving money on their bills by cutting back on water use. A St. Louis chemical plant bought 14 million gallons less from the city's water division this past year. A food ingredient manufacturer has trimmed water use by 40 percent over the past few years. City businesses have together cut 3.8 billion gallons or 25 percent over five years, and saved themselves millions of dollars.
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But in cities such as St. Louis, residents such as Young can't share in that savings.
Unlike businesses, city homes aren't metered. Residents pay a flat rate for water — they can conserve all they want and won't see a cent in savings.
Worse, the businesses' conservation efforts are indirectly increasing homeowner bills. When companies buy less water, utilities make less money, and boost rates.
Rates have risen for three years in St. Louis and are likely to rise again in each of the next four.
So, despite the dip in bulk sales, the city's water division billed for $44.6 million this past fiscal year, $6.4 million more than in 2005, according to a Post-Dispatch analysis of water division data.
Businesses are footing just $1.1 million of that increase, 5 percent more than they paid five years ago.
Residents, on the other hand, are paying $5.3 million of the bump, or nearly 30 percent more than they did five years ago.
Residents, not businesses, are now paying the bulk of the city water division revenue.
Not all of this can be attributed to business conservation.
The city is billing about 2,000 fewer customers than in 2005. Companies have closed. Residents have lost their homes. And, in other cases, businesses have simply trimmed production. For instance, though Anheuser-Busch wouldn't talk about it, the brewery's U.S. shipments were down 2 percent last year, and recent signs suggest another dip this year. "They're making less beer," said Benj Steinman, editor of trade magazine Beer Marketer's Insights.
Still, there's no doubt that water companies from coast to coast are reporting focused efforts to conserve.
Sales at Southern California's Metropolitan Water District have dipped 20 percent over three years, and its staff proposed a 12 percent rate hike. In Boulder, Colo., water usage fell to 1980s levels, and the city council considered a 3 percent increase. And in Ridgefield, Conn., customers were staring at a 19 percent bill bump this month because of conservation-driven sales declines.
"People wouldn't be surprised if a community's businesses did things to conserve energy and power," said David LaFrance, executive director of the national water nonprofit American Water Works Association. "They also shouldn't be surprised that companies are doing things to conserve water."
$9 MILLION UNREALIZED
In 2005, Anheuser-Busch, St. Louis' largest single user by far, paid the city $2.9 million for 2.7 billion gallons of water.
By this spring, the St. Louis plant had tightened its faucet by one-third.
This past fiscal year, A-B's south city brewery was using just 1.8 billion gallons, paying the city $500,000 less. And the water division was scrambling to make ends meet, because A-B was far from the only area business buying less water.
ICL Performance Products, which makes food-grade phosphates, heats its chemicals with steam. Whereas it used to let such condensation run off into the sewer, the company recently bought equipment to collect and reroute the water.
"With rates going up, it's a bigger part of the cost pie than it was 10 years ago," said Bill Cornmesser, manager of the plant, on Idaho Avenue in the Carondelet neighborhood. "So it makes more sense to spend more to try to reduce, or reuse."
ICL has cut 117 million gallons and $79,000 a year from its 2005 bill.
And while some companies acknowledge they have cut production recently, they also say water conservation makes sense: ÁñÁ«ÊÓƵ want to be responsible corporate citizens. And their bottom line will continue to depend on reducing costs.
"Those utilities, as you pointed out, are not getting any cheaper, and are projected to get even more expensive in coming years," said Jeffrey Whitford, global citizenship manager at Sigma-Aldrich, a maker of research chemicals headquartered on Spruce Street in midtown.
Sigma-Aldrich tapped 92 million gallons less this year than it did in 2005, and cut $52,000 in water expenses.
The city water division says such conservation, coupled with the dip in the economy, has cost St. Louis $9 million in unrealized revenue over the past two years.
Worse, it has set the department up for a disaster down the road.
COSTS SKYROCKET
Aldermen approved water rate hikes of 19 percent two years ago, 11 percent last year and 12 percent this summer.
Water division leaders say they need far more than that.
Across the country, water utilities are looking to replace old pipes and crumbling buildings. The U.S. Environmental Protection Agency estimated in 2007 that water companies will need to spend $335 billion in improvements over the next 20 years.
Missouri American Water Co., which serves about 370,000 customers in St. Louis County and much of St. Charles County, has boosted rates three times in four years, most recently in July, by 15 percent for residents.
Ann Dettmer, a spokeswoman for Missouri American, said much of the money generated by the latest increase — $80 million — had gone into infrastructure upgrades. "We are constantly replacing old water mains," she said.
In the city of St. Louis, officials also point to an aging system. Far up Riverview Boulevard, the pumps deep beneath the ground that drag water out of the Mississippi are coming on 50 years of service.
Some of the pipes that channel clean water south, into the city, are more than 120 years old. And the concrete that holds the water, as it passes from basin to massive basin, is crumbling.
Moreover, the city water division has cited other "unprecedented" cost increases. The price of chemicals needed to purify and clarify muddy river water has risen by $2.4 million since 2005. Employee medical insurance has gone up by $500,000, as have retirement benefits.
In total, operating expenses have risen by more than 25 percent over five years, to $47 million.
And those costs aren't going to level out, according to a report filed in February by consulting firm Black & Veatch. Had the city's Board of Aldermen not raised rates at all this summer, the water department would have experienced "complete depletion of all fund balances" by the end of next year.
And at that rate, the division would have had a $42 million bank account deficit by 2014, according to the consultants.
Aldermen, however, did raise rates some. And the department cut back spending as well, furloughing employees in the last fiscal year and cutting 19 jobs, or 5 percent of its work force, this year.
Moreover, division leaders agreed to team up with Anheuser-Busch — which was surprised this spring by the urgent rate hikes — to look for immediate cost-savings. And they are now preparing to send out bid requests for a lengthy professional study of division efficiency.
But no one's sure those examinations will find much more to cut.
"Honestly, there's not many cuts beyond personnel," said water fiscal manager Jim Kummer.
Even a paper by the free-market Show-Me Institute praised the division for its operations, as well as for water that is routinely rated as among the best tasting and least expensive in the country.
"The last thing you'll ever hear me say is criticizing the water division for its rates," said Institute policy analyst David Stokes, who is advocating for water meters citywide.
All of this leaves city leaders considering a series of rate hike proposals over the next several years. The first should come in January, probably for another 12 percent.
