Water and sewer warranty rates rising in Atlanta

Atlantans who collectively purchased more than 12,000 water and sewer line warranties endorsed by the city are learning rates are rising as much as 37 percent this month, an increase the warranty provider says is necessary because there were so many claims.

Atlanta officials partnered with a private company, Utility Service Partners, nearly two years ago to offer warranties against service line failures. The yearly cost of a sewer line warranty is jumping from $46 to $63, and the annual water line warranty cost from $46 to $54.

Brad Carmichael, USP’s vice president of business development, said the company has sold 12,114 warranties to Atlantans — 5,323 sewer line and 6,791 water line warranties. There’s a market for the products because leaks in water and sewer lines on private property are not typically covered by homeowner’s insurance.

Atlanta’s troubles with an aging water and sewer infrastructure are well documented; the city is now working to upgrade the system as required by a federal order. Residents have some of the highest water and sewer rates in the country.

While Carmichael declined to say just many repair claims Atlantans have made, a report from the Department of Watershed Management indicates 1,146 claims were processed between October 2011 through September 2013. Those repairs cost more than $1 million, according to the report provided by city officials.

“The original prices we went into the market with are just no longer sufficient to cover the cost of the claims,” Carmichael said.

The city, in exchange for sending out solicitations to Watershed customers, receives a 10 percent cut of revenue generated when residents purchase the product. Atlanta has received about $174,000 in royalty payments, according to city officials. The funds are directed to the Care & Conserve Program, which promotes water conservation and helps pay water and sewer bills for the poor.

USP’s three-year contract with the city ends this fall. City officials have the option to renew.

A handful of other cities in the metro area are part of the program, including Auburn, Powder Springs, Garden City and Union City, USP officials said. Rates for those cities are not changing, Carmichael said.