D.C. Water pays staff bonuses amid plans for rate hike

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During a series of public hearings on rate hikes, D.C. Water and Sewer Authority officials were quick to point out that they were doing everything they could to save money for customers, including enacting a pay freeze across management.

But after they received news of an unexpected surplus for fiscal 2010, officials used a slice of that cash the following year to pay out bonuses to management and other nonunion staff totaling more than a half-million dollars, records show.

The bonuses were given at a time when D.C. Water officials were warning about impending rate hikes, with current projections calling for the average bill for a single-family home to rise from about $66 per month to $72 in 2013. The rate hikes are expected to continue to $93 in 2016 and $118 by 2020.

The bonuses did not surface as a topic of discussion at a recent D.C. Council oversight hearing on D.C. Water’s operations, but the payments were disclosed in a written submission by the utility to the council’s Committee on Environment, Public Works and Transportation.

The disclosure does not list the names or titles of the employees who received bonuses, but says officials had no choice concerning about half of the overall $1.2 million paid out, which they said had to be spent because of a union contract.

“The union bonus was specified in the most recent collective bargaining agreement that expired [Sept. 3, 2011],” D.C. Water said in its report to the council committee. “The non-union staff received a performance bonus which varied by individual based upon actual performance evaluations of each employee.”

The report also stated that D.C. Water conducts interim and annual performance evaluations by employees’ immediate supervisors, reviewed by the next level of management and ultimately approved by department heads.

While about half of the incentive awards paid out were required by union contract, totaling $613,000, another $588,915 went to 123 nonunion employees, including D.C. Water managers and executives. Eight other employees received $15,026 in so-called special awards, including special recognition and hiring bonuses, records show.

“It was a discretional decision in lieu of pay increases,” D.C. Water General Manager George S. Hawkins told The Washington Times. “There are no such expenditures planned for 2012.”

When Mr. Hawkins was asked at a recent oversight hearing how the agency planned to use an operating surplus of more than $30 million for fiscal 2011, Mr. Hawkins said the money had been placed in reserve mostly for rate stabilization.

D.C. Water spokesman Alan Heymann said the reserve to pay the bonuses during fiscal 2011 came from a different surplus that came from money from the 2010 fiscal budget year. He described the bonus payments as a “one time” expenditure made because of the salary freeze.

“It was merit-based and it was evenly appropriated,” he said of the bonus payouts.

Mr. Heymann also said officials paid bonuses instead of raising salaries because pay hikes couldn’t be reversed, while bonuses could be paid just once.

In testimony last month, Mr. Hawkins outlined a series of projected rate increases expected to take place over the next eight years because of a host of projects, including replacement of aging pipes and sewers.

The agency has an annual budget of more than $1 billion, with more than half of the money going toward capital-improvement projects.

The average age of water mains in the District is 77 years, with sewers averaging 88 years. Officials say environmental mandates are increasing operational costs, too, with ratepayers picking up the bill.

“While the rates we charge our customers rise year after year, we are still catching up from a period of historic underinvestment in our infrastructure and operations,” D.C. Water officials told the council in its report to the committee.

“Meanwhile, there is a tremendous disconnect between the cost of the service and its value to civilization. Our average single-family monthly bill is about $66, compared to cellphone and cable bills that could easily cost twice as much.”

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