Water Bureau Chief Explains Rate Discrepancy

Portland blogger Jack Bogdanski unearthed a tantalizing piece of information last week—an obscure firm named Carollo Engineers is the Portland Water Bureau's second largest customer by volume but pays a only a small fraction per gallon of the rate other large users pay. 

Here's the meat of Bogdanski's inquiry: Carollo is getting a darn good price. It's no. 2 in usage, but it's no. 17 in what it paid the city for water. For its 291 million gallons, it paid the city just $0.000643 a gallon. Compare that with what the school district was charged for its 165 million gallons: $.003688 a gallon. The schools got charged more than five times as much per gallon as Carollo.

The parks bureau paid about the same as the schools -- $0.003428. Siltronic, the city's top non-wholesale customer, paid $.003227 a gallon -- again, five times what Carollo paid.

What is up with that? Good question.

Water Bureau director David Shaff says the difference in rates stems from the quality of water Carollo uses and the cost of getting it to the firm.

"The big, big distinction is that Portland Parks and Rec, Siltronic and other big users all get treated, potable water from the source [the city's Bull Run watershed, located near Sandy]," Shaff says. "We have $7 billion in infrastructure to deliver water. We all pay for it. Retail customers pay for operating and management costs, debt service, pipes, and other overhead. Those costs all go into rates for retail customers."

Carollo, a 74-year-old firm which designs and test water filtration systems, sucks untreated well water from the city's wells along the Columbia River, running the water through its filters and then discharging the water into the Columbia Slough.

Shaff says since the water is not treated by the city—and is therefore not potable—and does not travel through the city's water infrastructure, the cost is far lower. He says that any of the other big users could buy untreated water at the same price, although none is located right on top of the city wells and right next to the Columbia as Carollo is.

Bogdanski also raised a couple of other points: he wondered whether Carollo's proximity to a city water treatment plant means the firm has the inside track on contracts for the massive and massively expensive filtration plant that the federal Environmental Protection Agency wants Portland to build.

Shaff says that is not the case. "Carollo is not doing the design of the [ultraviolet filtering] facility that we may or may not have to build," Shaff says. "They are not the prime contractor."