Vanguard Analysis: Impact of Rates Unclear – It is worth noting that some of the most bitter and divisive machinations both in private and in public, occurred not necessarily with the core water project but rather in determining which rate structure to use.
After three hours of at times colorful and heated debate over several different versions of the rate structure, the WAC finally reached a decision by an 8-2 vote, with Former Davis Mayor Jerry Adler and Chair of the WAC Elaine Roberts Musser providing the dissenting votes.
The rate structure that was approved is a highly innovative consumption-based, fixed-rate water structure that was developed by WAC members Frank Loge and Matt Williams, and has never been implemented in California.
According to documentation received by the Vanguard, “The water rate is comprised of three components: 1) a fixed rate based on meter size that covers the ‘readiness to serve’ costs and meter replacement costs of the water system; 2) a consumption based fixed rate (CBFR) component that covers the remaining fixed costs of the water system (including the surface water project and other local improvements); and 3) a variable rate that will cover the variable cost to provide water when it is used by the consumers.”
“The consumption based CBFR fee is calculated by using the projected annual revenue requirement of the Water Utility and dividing it by the total annual projected water use of the Water Utility to produce a dollar per ccf rate,” the documentation explains. “The individual CBFR fee per customer is then calculated by taking the dollar per ccf rate and multiplying it by the individual customer’s average prior year’s monthly water use.”
Earlier versions of this were strongly opposed by water attorney Kelly Salt, as well as City General Manager of Utilities, Herb Niederberger.
Kelly Salt was strongly skeptical of the model, but early on Thursday she emailed city staff that she was now “comfortable with the revised Loge-Williams rate model that Mr. Williams has prepared and that you have described in the draft Prop 218 notice.”
Ms. Salt wrote, “Of particular importance to me is that this new rate structure includes and identifies a rate that will be imposed for each component of the water service fees.”
“As we discussed, the rates are based on annual revenue requirements and projected water use. Each customer will have his respective prior year’s average monthly use, so he can, applying the rates, project the amount of the water service fee that will be imposed on him,” Ms. Salt explains. “He can then choose to stay within that same average monthly water usage to project his future year’s water use, or assume some personal conservation and use a lower amount, thereby reducing his water service fee.”
Chair Elaine Roberts Musser was one of two dissenting votes on Thursday night. She told the Vanguard late on Friday, “Because of my position as Chair of the WAC,” she could not comment as to why she opposed the recommendation of the Loge-Williams rate structure.
Kelly Salt did note, “If the City chooses to move forward with using this model, we will need to work on the language in the Prop 218 notice regarding the basis upon which the fees were calculated. While the draft language that you sent to me describes the three components, we also need to explain how the rates for the three components were derived.”
As recently as last week, Herb Niederberger was skeptical of the plan, “The rating agencies aren’t going to be looking at that favorably if we have a rather new, rather innovative, yet untested rate design going forward.”
However, by Thursday, the revisions seemed to assuage most fears.
City Attorney Harriet Steiner said, “We do think there’s a lot of benefits to it, but we do need to make sure that it [the language] is tight as it goes forward.”
City Manager Steve Pinkerton told the Vanguard last night that he wants to go through the model again, but feels that with the latest revisions the city is not open to a lawsuit, which seemed to be the bigger fear going forward.
It is noteworthy that just about everyone expects some sort of lawsuit, and the city of course wishes to minimize the risk of losing such a suit.
Mayor Joe Krovoza declined to comment on the rate structure or the WAC’s approval of it, on the record.
There are, in fact, several different schools of thought going on at the moment. One argues that the rates are quite reasonable at the lower end, but some rate users both at the cut points and at the upper end might be detrimentally impacted.
However, there are a number of people that believe that the council will not approve this rate structure when it ultimately comes to them, perhaps as soon as November 27.
There is some concern expressed by a few prominent members of the community that the rate structure will in essence doom the project. They fear that the rates are incomprehensible to the typical voter.
It is worth noting that WAC Member Michael Bartolic stormed out of the meeting on Thursday, proclaiming his refusal to vote on rates that he could not comprehend.
The council, at least one person, told us it is now in a lose-lose scenario. If they vote for the project, the project will lose primarily because the public will not understand the rates and people like Michael Harrington and Bob Dunning will have an easier argument.
On the other hand, if they vote against the WAC recommending rates, they run the risk of opposing a rate structure that will be vastly more fair to lower end users, and an innovative and pioneering system.
The bottom line for the Vanguard is that it is really too soon to predict how this process will continue to unfold.
—David M. Greenwald reporting
From the Davis Enterprise:
“Starting on May 1, the average single-family home would pay $6.96 as its base fixed fee, $37.08 for the CBFR fee based on an average of 18 hundred cubic feet of water the previous year and if they used 24 ccf for the month, $11 for their variable water usage.
This would result in a monthly water bill of $55.04. (Eighteen ccf is about average for single-family homes in Davis.)
By 2018, using the same amount of water use, the average bill would be about $145.51.”
Another way of thinking about this would be for homeowners to realize that their current 2 month bills would go from the $200 range to the $500 range. Talk about sticker shock.
Agreed that this is a significant amount of money. Yet another way of thinking about it would be that it allows a significant amount of individual control through deliberate water conservation.
David: it’s not to soon to predict. The water referendum committee has been predicting it accurately since September 2011. The project is too big, too expensive, and too soon. The CC faces a dilemma on Tuesday night as to the rate structure. It’s probably a lose-lose. But the CC did this to itself because of the rush being dictated by the CC of Woodland. Who would have thought our Davis CC would be taking marching orders from “The Northern Menance,” as Dunning calls Woodland?
We laid out a process to proceed with handling this matter but the CC refuses to discuss it. Since the CC balled this up so badly we will now take it straight to the voters, eliminating the control the Woodland CC has over our CC. We gave our CC over a year but it’s clear things are a mess.
Yes think from what I understand, is that the homeowner can control their costs somewhat and if the 3 parts are itemized in the bill, can see their conservation.
Am wondering about your last statements David. Wouldn’t Bob and Michael be in favor of this methodology or do you think the latter’s opposition to the entire project could use the complexity of this rate structure to doom the vote?
I tried to watch the meeting but couldn’t find it on. Anyone know if it will rebroadcast?
[quote]They fear that the rates are incomprehensible to the typical voter.[/quote]
The rate structure concept seems pretty clear to me. What the “typical voter” probably has a harder time figuring out is “why this project, and why now.” There’s so much contradictory and seemingly speculative information floating around that it’s hard to feel confident that we’re heading in the right direction.
[quote]some rate users both at the cut points and at the upper end might be detrimentally impacted.[/quote]
Everyone is going to be “detrimentally impacted” by the new rates — they’re going up, way up. But people who find themselves on the wrong side of a cut point can do something about it: reduce consumption.
I’m not sure what’s meant by those at the “upper end,” but they, too, have the option to lower rates by reducing consumption. If it’s the fixed-rate component that’s the problem, I don’t see why they can’t replace their big-pipe meters with smaller ones.
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The project has to be paid for some way so the more people conserve the higher the fixed rate component will go up.
Actually rusty the beauty of the CBFR rate structure is that it defuses that issue completely by eliminating the erosion of fixed revenue due to conservation. The fixed revenue generated by the first two components of the rate structure will cover 100% of the fixed costs of the water agency each year.
Achieving that kind of fiscal stability wa the primary reason that Frank and I developed the CBFR method.
“Wouldn’t Bob and Michael be in favor of this methodology or do you think the latter’s opposition to the entire project could use the complexity of this rate structure to doom the vote? “
As was explained to me, the rates don’t address Bob’s concerns about larger families and the response that was given to me was they were a relatively small number in the city.
I’ll let Michael speak for himself if he chooses to.
“I’m not sure what’s meant by those at the “upper end,” but they, too, have the option to lower rates by reducing consumption. “
At the high ends you are talking about commercial interests. Someone suggested the city and schools in particular may get socked by these rates.
“The project has to be paid for some way so the more people conserve the higher the fixed rate component will go up. “
And that’s always the problem here, individually you can reduce your costs, but not collectively.
To put the “cut point” into perspective in Year 1 of the rate structure the Single Family Residence Tier 1 will go from 0-10 ccf and have a rate of $0.40 per ccf and Tier 1 will go from 0-10 ccf and have a rate of $0.50 per ccf.
In an e-mail exchange with Bob Dunning last night, Bob said “[i]Matt – I’m working for a solution. This [tiered structure] is badly flawed. Not a solution. It WILL BANKRUPT MY FAMILY. Period. That would be fine if it was fair. It’s not fair.
You have yet to explain how it is fair to charge my family a higher RATE and my water wasting neighbors a LOWER rate.”[/i]
My response to him was as follows:
[i]Bob, from our past discussions I believe you have six people living in your home. Giving you a generous allocation per person of 65 gpcd your six person family’s monthly consumption will be 15.86 ccf (2.64 ccf per person). Looking at the proposed tiered structure (pasted below) Your monthly fee in 2013 computes to $6.93 per month, which is 59 cents higher than it would be if the first tier break happened at the same point it is in the current rate structure, 18 ccf. Is 59 cents a month going to bankrupt you? In the first half of 2014 that 59 cents per month will rise to 76 cents per month. In Fiscal Year 2014/15 that 76 cents per month will rise to $1.05 per month. In Fiscal Year 2014/15 that $1.05 per month will rise to $1.46 per month. In Fiscal Year 2015/16 that $1.46 per month will rise to $1.70 per month. In Fiscal Year 2016/17 that $1.70 per month will rise to $1.87 per month. In Fiscal Year 2017/18 that $1.87 per month will continue to be $1.87 per month.
Which brings me to the question, “Will $22.50 per year bankrupt your family?”[/i]
Each consumer is different, but I believe focusing on the impact of the “cut point” in the tiered portion of the rate structure is misplaced.
David M. Greenwald said . . .
[i]”The project has to be paid for some way so the more people conserve the higher the fixed rate component will go up. ”
And that’s always the problem here, individually you can reduce your costs, but not collectively.[/i]
I strongly disagree David. The overall costs for the project have been reduced by $47.7 million. Davis share of that savings is currently $22.9 million. That is significant cost reduction.
The problem is that we have trimmed the size of most of the project components down to the point where further reduction will yield no incremental savings. The intake in the River, the raw water pipelines from the intake to the treatment plant and the treated water pipelines from the plant to Davis are all now at their optimal size regardless of whether the capacity is 30 mgd or 24 mgd. So
Michael’ desire to further reduce the overall plant capacity to 24 mgd by reducing Davis’ share to 6 mgd would probably result in another $10 million in cost savings in the Treatment plant itself.
Lets put that $10 million savings into perspective. An average for the 16,433 accounts in Davis that is $608 for the life of the project, which translates to approximately $24 per average account per year, or $2 per account per month.
But going to 6 mgd will produce more wear and tear on the existing groundwater system, and at a cost of $4-5 million for each new fully treated deep aquifer well it isn’t hard to imagine that going from 12 mgd to 6 mgd will result in an average savings of $1.00 per customer per month.
Matt:
“Actually rusty the beauty of the CBFR rate structure is that it defuses that issue completely by eliminating the erosion of fixed revenue due to conservation. The fixed revenue generated by the first two components of the rate structure will cover 100% of the fixed costs of the water agency each year.”
Am I missing something Matt? If more and more of your neighbors start to conserve doesn’t that have the effect of raising everyone else’s part of the pie?
[quote]At the high ends you are talking about commercial interests. Someone suggested the city and schools in particular may get socked by these rates.[/quote]
Both the city and the school district are, effectively, us. We’re going to pay for their usage one way or the other, so this doesn’t seem like a credible argument against the rate structure. As for commercial interests, how to the higher tier rates compare with charges in comparable municipalities? Is there a disproportionate loading of the rates at the higher tiers?
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Anyone see how healthy it is that our community is talking about these important issues before we get a citywide vote? Three members of our current city council attempted last Sept 2011 to block that discussion and the vote. Now all 5 are rushing it. The rates are a mess and no solution in sight. They don’t even have a real design or bids, and they want us to vote to vastly raise our rates ? Please !
Woodland never had a citywide vote, and their citizens advisory committee was stacked with political subordinates to the CC who appointed them.
Sue, we miss your vote.
rusty, yes it does, but unlike the current system, which is fiscally “broken” the increases you describe come in small digestible increments rather than in large traumatic rate increases. The CBFR rate per ccf that is being used to cover the fixed costs at a 100% level already has very aggressive conservation numbers built into it. To put that fixed fee “protection” into perspective, the Natural Resources Commission set 134 gpcd as the 2020 target for aggressive continuing conservation in Davis by 2020. To protect every Davis water customer from unplanned for rate increases the 2020 “expected” conservation built into our rate calculations so that Davis hits 120 gpcd in 2020.
Bottomline, in designing CBFR Frank and I have “heard your pain” and taken some very creative and fiscally powerful steps to ensure that that pain goes away [u]permanently[/u].
Hi Matt
Please describe again how conservation wont ‘hurt’ the consumer. Maybe with example?
I remember seeing my parents in Bay Area conserve along with others in the 1979s drought (no flush, washing machine water for plants, brown lawns etc) then seeing rates go up bc of so much conservation (my recollection from hearing second hand since I was back East at that time).
Thanks Matt.
Once again, our average local utility bill is going up to approx. $500 every two months, how are a great number of the residents going to afford that? And I’m not talking about just the lower earners either. What a blow to the local economy and good luck passing any future school parcel taxes.
My mind is spinning with this, I ask the same questions as rusty, if I’m at 18 ccf, what am I paying? And at 28 ccf?
“and their citizens advisory committee was stacked with political subordinates to the CC who appointed them.”
As chair of the Woodland committee I would like to point out that this statement in regards to the Woodland Water Utility Advisory Committee is not correct. About half our committee members were selected by our City Council; the other half were selected by staff. Most of the staff selections (myself included) did not know the staff members who chose them. As a scientist who has spent her career in academia, I find the notion that I might be a “political subordinate” especially amusing.
More importantly, many committee members chosen by City Council were selected specifically because they had expressed opposition to the surface water supply project. Council was confident that once a reasonable group of residents and business owners examined our City’s options they would agree with the Council’s support of the project. After six months of thorough discussions, we moved from a committee in which most members opposed the project to one in which 16 of 18 members supported it.
Two years later we still support the project and look forward to partnering with Davis to go online in 2016.
I think that’s similar what happened here. I still have questions but have moved to leaning towards supporting he project
The water rates will have to go up just as high regardless of whether we go forward with the water project or not. There is no cheap option, but there is an option that gives us value for our money. Personally I think it is better to use my money to secure safe, clean, water for future generations rather than to pay the fines for failing to do so (and in the process continuing our non-compliance with the Clean Water Act). The price will be the same regardless of the choice we make, and regardless of the volume of nonsense put forward by Michael H., Bob D. and David G.
SODA said . . .
[i]”Hi Matt
Please describe again how conservation wont ‘hurt’ the consumer. Maybe with example?
I remember seeing my parents in Bay Area conserve along with others in the 1979s drought (no flush, washing machine water for plants, brown lawns etc) then seeing rates go up bc of so much conservation (my recollection from hearing second hand since I was back East at that time). Thanks.”[/i]
Excellent question SODA. The new water rate structure is composed of three components that reflect the new Conjunctive Use water system approved by the Water Advisory Committee and the City Council. Those components are
1)Charges that cover the costs the City must pay that were incurred to build the existing groundwater sources (wells) and the water distribution system (mains and pipes and meters and treatment and customer service)
2)Charges that cover the fixed costs incurred to build the 12 million gallon per day (mgd) Surface Water Plant
3)Charges that cover the variable costs that the City incurs to run the water system each day and provide reliable water to each and every consumer whenever they need that water
So how does conservation affect each of those three components?
The first component does not vary based on consumption volume or conservation level. In our current rate structure for a 3/4 inch meter a customer pays a monthly fixed fee is $11.50 per month ($23.00 per bi-monthly billing period). That $11.50 will drop to $6.96 per month in the first year of the new rate structure and then progressively rise to $11.05 per month in FY 2017/2018.
The second component rewards each individual consumer’s conservation but insulates each consumer from the specific conservation of others because a level of conservation is built into the rates. So if in year one your base consumption was 100 ccf your second component fee would be 100 times $0.27 per ccf or $27.00 per month. If in year two your base consumption stayed the same then per the rate schedule your second component fee would be 100 times $0.34 per ccf or $34.00 per month. If you achieved 10% conservation in year one, then your year two second component fee would be 90 times $0.34 per ccf or $30.60 per month.
I’m sure you are asking how are the $0.27 per ccf and $0.34 per ccf rates calculated? In the first year the fixed cost budget for the whole system is $9,568,085 and the base period total consumption for the whole system is 2,968,258 ccf. $9,568,085 divided by 2,968,258 is $0.27 per ccf. In year two because some of the surface water plant costs will be hitting the budget, the fixed cost budget for the whole system is $11,732,365. Anticipating an overall system-wide conservation of 5.6% the denominator in our per ccf calculation drops to 2,885,174 and the per ccf rate then is $11,732,365 divided by 2,885,174 or $0.34 per ccf. So unless the overall conservation rate exceeds 5.6% in year one each consumer is insulated from being “hurt” by unplanned conservation.
The third component also rewards rewards each individual consumer’s conservation. It also insulates each consumer against the effects of overall system conservation because every ccf unit of conservation will produce both a unit of lost revenue and a unit of saved cost. That is because we have covered 100% of the system’s fixed costs in the first two components. In the current rate structure when a unit of conservation happens two units of revenue are lost for every one unit of cost that is saved. That structural deficit in the rate structure has produced an overall $2 million deficit system wide in the most recent fiscal year . . . and as conservation increases that deficit only gets bigger.
Did that answer your question?
Christine Casey: sorry , but I respectfully disagree with your comments as to the objectivity of the review
Look at Davis: the JPA proponents almost got last years disaster approved.
Since you have studied it, then you must know that the Woodland rate system is disproportional and violates Prop 218 as discussed by the 2011 decision in City of Palmdale? I think it would be relatively easy to stop Woodlands participation in the project because it’s based on a flawed system.
Mayor Marbles: don’t be so cocky in continuing your mucking around in Davis politics by forcing on us your emergency and need to build the plant To escape the negligence of how you’ve managed your wells. We might get interested in your rate structure …. So stop your political interference with Davis’ taking its time to get our supply system right. Our sky is not falling, but I think yours is about to.
[i]”To escape the negligence of how you’ve managed your wells.”
[/i]
I asked you before, I ask you again. How did Woodland “mismanage” their wells, Mike? You’re a lawyer: isn’t negligence a legal term? In what way were they negligent?
Negligence is a legal term but the common usage doesn’t necessarily imply legality. It simply means, “failure to exercise the care that a reasonably prudent person would exercise in like circumstances..” So if they didn’t take care of their well system it would be negligent.
So my question for Mike Harrington is: how did Woodland mismanage their well system?
Growth issue said . . .
[i]”My mind is spinning with this, I ask the same questions as rusty, if I’m at 18 ccf, what am I paying? And at 28 ccf?”[/i]
The Prop 218 Notice has a calculator layout at the end to help you through that, but I strongly feel that in today’s world of databases and mail merge programs, each consumer’s Prop 218 Notice should arrive to them with their individual calculations already done for them.
But with that said, let me step you through an 18 ccf scenario and then a 28 ccf scenario,
If you have a 3/4 inch meter your monthly fixed fee in 2013 will be $6.96.
If your base period consumption is 162 ccf, then your surface water plant fee is 162 times $0.27 which equals $43.74
If your monthly consumption is 18 ccf then the first 10 ccf are in tier 1 @ $0.40 per ccf and the remaining 8 ccf are in tier 2 @ $0.50 per ccf. Multiplying that out 10 x $0.40 = $4.00 and 8 x $0.50 = $4.00, so your third component monthly bill is $8.00. At 28 ccf the added 10 ccf are all in tier 2 a $0.50 per ccf, which adds $5.00 to the $8.00 to total $13.00.
Adding the numbers up your 18 ccf bill would be $6.96 plus $43.74 plus $8.00 for a total monthly bill of $58.70 and your 28 ccf bill would be $63.70.
How does that compare to your current bill?
You 3/4 inch meter costs you $11.50 and at 18 ccf per month all of your consumption is in tier 1 and costs you $1.50 per ccf. Multiplying that out your 18 ccf monthly bill is $38.50. At 28 ccf, all your added 10 ccf are in tier 2 at $1.90 per ccf, so that increases your bill by $19.00 to $57.50.
So in summary, 18 ccf your current bill would rise 52% from $38.50 to $58.70, and at 28 ccf your current bill would rise 11% from $57.50 to $63.70.
Ryan Kelly: you had mentioned earlier the point Mike Harrington was making about residential vs commercial rates, using his own property. Here is the Vanguard thread in which that is discussed:
[url]https://davisvanguard.org/index.php?option=com_content&view=article&id=5286:vanguard-council-question-2-water-referendum&catid=58:budgetfiscal&Itemid=79&cpage=60[/url]
Don and friends: isn’t it a little bit embarrassing for you to watch our CC getting bullied by the 12/6/11 public comment lecturing and continuous drumbeat of emergency sky is falling communications from Woodland City Hall? It’s like our CC members think they are going to get votes from Woodland or something.
I find the whole water project process to be appalling.
It would be helpful mike if you answer some of these questions rather than repeating the arguments
Mike H: “Don and friends: isn’t it a little bit embarrassing for you to watch our CC getting bullied by the 12/6/11 public comment lecturing and continuous drumbeat of emergency sky is falling communications from Woodland City Hall? It’s like our CC members think they are going to get votes from Woodland or something. I find the whole water project process to be appalling.”
Mike If that isn’t campaigning on this blog, what do you call it?
Growth issue said . . .
[i]”Negligence is a legal term but the common usage doesn’t necessarily imply legality. It simply means, “failure to exercise the care that a reasonably prudent person would exercise in like circumstances..” So if they didn’t take care of their well system it would be negligent.”[/i]
GI, Woodland has taken every bit as good care of their wells as Davis has. The issue for Woodland is that the deep aquifer that Davis has already sunk seven wells into, does not extend as far north as Woodland, so all they have access to is the shallow and intermediate aquifers. Their well issues have little to do with maintenance and everything to do with constituents, especially nitrates that are percolating down into the aquifer due to farming activity. So, bottom-line there has been no negligence or absence of care in Woodland . . . but that doesn’t change the problem they face. They simply weren’t as blessed by Mother Nature as Davis waswhen the distribution of the deep aquifer was geologically and hydrologically created.
Thank you for explaining what Harrington refuses to. Mike you have a different answer?
Another interesting topic that the WAC has not touched is: our local City government has done nothing to educate the public about the harm that old style water softeners are doing, and all of the fertilizer that many dump on their yards without a thought that it may harm the wells below.
I would very respectfully disagree with Matt, based on my own consultant’s research. Again, I am not trying the campaign on this blog. Woodland has a lot of options to improve its system, and come into compliance with standards, but they chose to engage Davis and set up a huge subsidy from us in trying to build this Taj Mahal gold plated plant. Darned near got away with it.
Aren’t any of you curious how it came to be last year that those 9/6/11 water rates were so bad, and that 4 members of the CC endorsed them and tried to raise our rates based on staff and consultant analysis that was discredited before the vote?
The same staff and consultants who gave us Sept 6th rates are still in there, selling the current plant and rates to us.
Wonder why suddenly, after Dec 2011, the City staff and consultants decided that the water plant could, actually, be much smaller and we did not need so much of that new-fangled surface water, when months earlier they basically said we were going to grow ill from contanimated water? Again, those same staff and consultants are all still here, telling you that we simply have to have this still too large plant, right now, or the Woodland train is going to leave the station?
Aren’t you just a little skeptical of those professionals whom somehow cannot keep their stories straight while they try to sock our families with vastly higher rates?
I stay on this subject because I hate to see the rip-off of our poor and middle class families’ precious money for a public project that is too big, too expensive, and too soon. The oversupply of the water will clearly go to supporting urban development of Eastern Yolo County, including the green zones around Davis and Woodland, and the Hwy 113 and Poleline/Rd 102 growth corridors.
The planning is a mess; this week the WAC voted on a rate system without much understanding of what it was or its true effects on budgets. I’m not taking a substantive position on the rate system right now, but the WAC has been artificially pushed too fast by a CC that is being bullied from Woodland and won’t stand up to them and their faux emergency.
The WAC is doing its best while being undermined by Woodland. The Woodland CC can rip off its own population, but we are not going to let them do it to us.
Michael H. “[i]I stay on this subject because I hate to see the rip-off of our poor and middle class families’ precious money for a public project that is too big, too expensive, and too soon.[/i]”
Our opportunity to make this project more affordable came and went 10-12 years ago when it became clear that our existing water supply would not allow us to comply with the Clean Water Act. The Council at the time could have acted to marginally raise our rates and begin planning and building for the future. By this time, we could have paid for the entire project while feeling very little impact on our water rates. Based on his postings here over the past year, Michael H. is proud of the fact that he failed to act on this problem when he was on Council. As he does now, he claimed then that we didn’t need the water; he was wrong then, and he is wrong now. His failure to act is [b]directly responsible[/b] for the fast ramp-up in rates that will be required today. If Michael was truly interested in protecting the poor and middle class families then he should have acted when he was on Council. Today, his comments are just so much hot air.
Mike: how did Woodland mismanage their well system? In what way were they negligent?
Mark: my estimate is there will be a very fine conjunctive use supply system/contract in place in 4-5 years. We will pay for what we use, not more. There won’t be the large spike in rates. The rates will be increased responsibily, after the community has pulled out of the economic ditch we have been in since 2007. There are many ways to do this without the JPA and giving away our sovereignty to people like the Woodland CC members who come insult us in our own house, like they did on 12/6/11, and falsely use their faux emergency to interfere with our political process.
Conaway Ranch water, ground water, river water will all be a part of a well thought-out plan that is fully vetted with clear and transparent baseline features, specific rates known in advance of the ballot measure, public ownership and operation of the plant by city employees who get their W-2s from us, and thoroughly discussed in a fair and accurate and open campaing before the citywide vote. I promise you this, based on all the information and analysis I have right now. When this project is done right, you will not see any sort of controversy about it.
Really? How is that river water going to get to Davis, Mike?
Also: how did Woodland mismanage their well system? In what way were they negligent?
How does this new way of breaking out the individual components for the water bill impact the comparing of the JPA project with building a conduit to bring purchased water from West Sac to Davis? Looking at the new JPA rate for the first year is a way of avoiding focusing on the tripling of rates that are there early in the following years plus speculative cost quotes that do not include interest on the loan, questionable 20% conservation projections included to reduce the first Sept. rate offering, all are failed attempts to craft a narrative which has eroded the credibility of this JPA project.
davisite, the Consumption-based Fixed Revenue rate methodology was created long before there was any clarity about which project would be selected.
The methodology was created to provide:
o Fiscal Stability
o Better Proportionality
o Increased Fairness
o More Stable Rates Over Time
and
o Increased Conservation Incentive
None of those reasons have anything to do with any specific project. The Department of Water Resources, the California Public Utilities Commission, the Alliance for Water Efficiency, the Association of California Water Agencies and the California Water Association have all actively taken steps to see this methodology explored in jurisdictions far beyond the boundaries of the City of Davis and/or Yolo County. They see it as being a solution to the fiscal challenges that all water agencies and water companies in California have confronted since the turn of the century.
To denigrate the rate structure as political spin is beneath contempt. You should be ashamed of yourself for stooping so low.
The only reason you don’t see all five years of the rate structure in the comments here is because of the severe limitations of the formatting capabilities.
With all the above said, it is worth repeating the three major components of the rate structure
1) Charges that cover the costs the City must pay that were incurred to build the existing groundwater sources (wells) and the water distribution system (mains and pipes and meters and treatment and customer service)
2) Charges that cover the fixed costs incurred to build the 12 million gallon per day (mgd) Surface Water Plant
3) Charges that cover the variable costs that the City incurs to run the water system each day and provide reliable water to each and every consumer whenever they need that water
Those three components actually put MORE focus on the costs associated with moving Davis’ current groundwater-only system to one of conjunctive use. The middle component which makes up 75% of the total rate is specifically designed to focus on the additions we are making to the water system. If we had gone with West Sac the only difference would have been the replacement of the one word “build” with the two words “contract for”
It is worth noting that Mark West and others would argue that if one stayed with a groundwater-only system there would be substantial costs that would fill that second component as well.
Bottom-line, this rate structure promotes transparency . . . an to me that is a good thing.
End of rant.
Yes Matt. Your examples help but how about if Davis conserved mightily. Wouldn’t that impact the second part of your plan so severely that the water project costs wouldn’t be met. I am sure I am missing something but am at Ag football game (23-20 Go Ags)…..
“Looking at the proposed tiered structure (pasted below) Your monthly fee in 2013 computes to $6.93 per month….”
Matt… your lengthy and detailed response with the final question/comment asking would this small increase BANKRUPT was what I was addressing. It would have taken just a little more ink to have acknowledged that the increase(whatever the figure is) would be close to tripling in the next few years.
Thank you, Don for finding that thread. My recollection was wrong. Mike was saying that his residence was subsidizing his commercial building and not the other way around.
I’m tiring of hearing about the evil empire to the north of us. I think that it is unnecessary and just plain rude.
davisite, one of the things that the WAC determined in its lengthy transparent deliberations was that 1) the most recent offer from Mayor Cabaldon for “permanent customer status” when compared with the 50/50 pipeline split and 60/40 everything else split for the Woodland alternative resulted in combined capital and operating costs (including debt service) that were virtually identical (within $1 million of one another). If we accomplish the cost sharing that Bill Kopper and mark Siegler advocate for, then the Woodlan alternative becomes more than $5 million less expensive than the West Sac alternative.
Unless you are looking to go against Bill Kopper and Mark Siegler’s motion/second back in June to take groundwater-only off the table, then no matter what direction Davis chose to go the rates would come close to tripling by the end of 2020.
So I’m not sure what your point is?
[i]The rate structure concept seems pretty clear to me. What the “typical voter” probably has a harder time figuring out is “why this project, and why now.”[/i]
I think this gets to the heart of one big challenge here. I support the rate structure model proposed by the WAC. I think it is the best design that anyone could come up with considering all the variables and competing interests. However, everything about this project is complex… too complex for the average resident to digest.
What we need is a simple cost-benefit analysis with the pros and cons.
For example:
[b]Costs…[/b]
-Based on all the assumptions… if your monthly water service charges are within this range today, then they will be within this range after the new rate structure.
[b]Cons…[/b]
-Higher family water rates.
[b]Pros…[/b]
-More reliable long-term water source for the city.
-Better tasting tap water; eliminating the need for bottled water.
-Softer water; eliminating the need for water softeners and chemical cleaners used to remove water spots.
-Reduction in mineral deposits in plumbing that can lead to expensive repairs.
-Reduction in effluent discharge that otherwise threatens the health of delta wildlife.
-Eliminates the risk of state and federal fines for non-compliance with environmental regulations related to effluent in water discharge.
-Higher rates offset somewhat by appreciation in property values resulting from higher quality water service.
Now, if only we could find a disingenuous and non-transparent way to tie spending on waterworks to student welfare, just as we have done for education spending, this thing would be approved without any fight.
Great summary, Jeff.
davisite2 said . . .
“Matt… your lengthy and detailed response with the final question/comment asking would this small increase BANKRUPT was what I was addressing. [b]It would have taken just a little more ink to have acknowledged that the increase(whatever the figure is) would be close to tripling in the next few years.[/b]”
Fair enough davisite. The reason it wasn’t there was an accident of context. Bob Dunning and I were in the midst of a 78 e-mail (39 for him and 39 for me) over the preceding 24 hour period, in which Bob was laser focused on the social injustice of a variable rate with tiers but no water budget. So the comment I was responding to was equally laser focused on the dollar difference that an account using 18 ccf per month would see if the tier break were at 18 ccf rather than the Bartle Wells suggested 10 ccf. The difference in 2013 in the proposed rate structure is 10 cents per ccf per month, so the incremental cost for the 8 ccf between 10 and 18 is 80 cents a month and $9.60 per year. Even in 2018 when the difference rises to 26 cents per ccf (very close to your projected tripling) the incremental cost per year is only $24.96.
I actually support Bob’s desire for water budgets in the variable portion of the rate structure. The key to a successful water budgets implementation is gathering the account data that is needed to set each individual account’s allocation. I explained to Bob that it will probably take 12 months to gather and analyze the data from all 16,433 accounts, but his e-mails argue that any such delay is morally unsupportable. My response was an effort to show him what the price of that position of his is.
Excellent discussion