The NYC Department of Environmental Protection (DEP) is responsible for proposing water rates, while the Water Board is responsible for establishing the rate following the proposal and subsequent public hearings. DEP delivers over a billion gallons of drinking water, treats 1.3 billion gallons of wastewater, and maintains more than 7,400 miles of sewer pipes each day.

This year, the Water Board confirmed DEP’s proposed 4.9 percent rate increase in water rates. While there were no rate increases in 2017, 2018, and 2021, the 4.9 percent rate increase represents the largest hike since 2014, when rates jumped 5.6 percent. Since 2002, the biggest water rate increase was over 14 percent in 2009.

The new rates for commercial and residential properties go into effect on July 1. The new water rate translates to monthly bills that are bigger by about $4 on average for single-family homes and $3 per unit for multifamily buildings. DEP has projected the new rate will increase revenue from $3.5 billion in fiscal year 2022 to $3.7 billion in fiscal year 2023, which will pay for debt service as well as the costs of maintaining and operating the city’s vast water system and cover associated capital costs.

DEP’s proposed capital budget is, at $10.12 billion, the third largest in the city after the departments of education and transportation. Those costs cover mechanisms to control water pollution, maintaining and building sewers, and projects to improve stormwater drainage. This is important given the flooding experienced during Hurricane Ida in the fall and for the system to be able to handle the increasingly extreme weather predicted due to climate change.

DEP says the rate increase is due to costs made higher by inflation with less revenue to pay, due to those behind on bills, and decreased water usage as a result of the pandemic. Where pandemic trends pushed water usage down citywide, residential usage, which accounts for 80 percent of revenue, is back up to pre-COVID levels, according to DEP officials. But non-residential usage hasn’t quite rebounded. In total, customers consumed about 690 million gallons of water per day in fiscal year 2022, compared to nearly 712 million gallons per day in fiscal year 2019. And customers owe $778 million worth of water payments, according to DEP figures.

Currently, DEP is in the middle of a three-year study on how water rate structures could change to become more affordable and equitable for customers. Because DEP revenues depend on water usage, the less water one uses, the more DEP has to charge everybody per gallon because many of the costs are fixed.

Right now, customers pay based on the water they use, rather than for how much stormwater is discharged. That means large stores with massive parking lots and traditional rooftops might not pay as much as an apartment building, even though the stores would likely create more runoff that the city must treat. A different structure with a separate stormwater charge could incentivize the creation of green roofs, reuse of water on site, and other mechanisms that help manage stormwater, prevent flooding, and mitigate pollution. The study is scheduled to come out in 2023.