By Senator Lois Wolk
The city of Davis’ water policies have been extraordinarily consistent for several generations. Supported by all City Councils and city managers, the policies have been to:
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Protect the drinking water supply;
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Reduce our reliance on groundwater through diversifying the supply and conservation; and
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Recognize our role as a discharger of wastewater into the Sacramento-San Joaquin Delta by improving our environmental efforts related to water.This water policy reflects who we are – a medium-sized city, 100 percent dependent on groundwater, surrounded by agriculture, on the northern edge of the Sacramento San Joaquin Delta.
Consistent with this policy, past councils have metered all water connections, including highly controversial retrofitting all existing homes and businesses. Councils have raised rates to deal both with sewage treatment and the increased pumping and treatment of the groundwater. Councils have encouraged conservation through rebates for higher water use efficiency. Councils have reduced pollutants into the groundwater from landscaping and other uses into the sewer systems. Councils have spent 20 years in a successful effort to secure surface water rights from the Sacramento River to mix with deteriorating ground water.
These actions, particularly when they were accompanied by rate increases over time, were not easy; some were very controversial.
Here is what we know in 2013.
We know the quality of our water, 100 percent groundwater from wells, is deteriorating. Most people don’t drink it. We have learned that the delta is dying due to the pollutants from all of us, cities and agriculture together. We know our infrastructure – the pipes, wells and water mains – is crumbling. We know that we have to treat all wells now for pollutants, a clear change since 1990.
We know we have dug deeper wells, and the deeper we go, the less certain we can be about quality and quantity over time or how or when deep wells actually recharge. We know that the only alternative to diversifying our groundwater with surface water would be refusing to uphold the federal Clean Water Act and other state and federal laws and worse, continuing to mine the groundwater still further.
We have lived off of the groundwater, sewage treatment plant, pipes, mains and wells of the past generations. It’s time to reinvest in our public water system.
We are not alone. The cities around us – Vacaville, Sacramento, Fairfield, Stockton and many more – already have acted and raised rates and built or expanded plants. Our rates, once adjusted, will be in the average of these communities, some of which are much less able to afford rate increases than we are. And we are fortunate to have a partner in Woodland, a city our size that is 100 percent groundwater-dependent, surrounded by farmland, emptying into the delta.
This City Council has been unique in its efforts to address the water issues, and confront the difficult choices. It has done so in a consensus fashion, open to all. The council and the capable Water Advisory Committee have reviewed the complexity of water policy, and suggested a fair path to us. It is the right path. It is the smart path. And it is the best path.
The public investment is what we must make, all of us, to keep this community a desirable one. No less than schools, parks and safety, clean water and sewage treatment are part of what we elect the City Council to do and expect local government to do. We also expect our city government to be good stewards of our region, of the delta, the largest estuary on the West Coast of the Western Hemisphere.
We owe it to future generations to give them what we know is a necessary legacy – clean and reliable water. Our promise must be that their Davis will not be less than ours has been.
Please vote yes on Measure I.
Lois Wolk represents Davis in the California Senate and has been a member of the California Assembly, the Yolo County Board of Supervisors and the Davis City Council.
Is it appropriate for a state senator to take sides for or against a local issue?
She’s a city resident and a former Mayor, why not?
If its in her district of course it is.
Senator Wolk has been a tenacious advocate for clean water and protection of the Sacramento Delta throughout her career. She is a distinguished leader who has fought to provide clean water to the poorest communities throughout the Central Valley. She has worked to provide resources from the state to aid our local project. We have elected her to lead our community at all levels of regional government. She has served on the School Board, City Council, Board of Supervisors, and in both houses of the legislature. There is no other person with more experience in local policy. We would be wise to give serious consideration to her advise.
Did she say “let our legacy to our children to be huge debts for a marginal need for water, and a need that won’t be needed, if at all, for many years”?
[i]a need that won’t be needed, if at all, for many years”?[/i]
Peak capacity problems begin in 2017.
“In terms of the deep aquifer: As I’ve mentioned many times, yes, we don’t know how much water is in the deep aquifer, or how long it will last. It could fail in ten years or in 100 years. It could be that, with natural and man made recharge, it could be sustainable. We just don’t know. That is why I have suggested that we put in place the means to complete the surface water project quickly. The aquifer will not fail overnight. If we run into serious problems, we will just have to spend what it takes, even if the fiscal consequences are catastrophic. But we are not there yet. It could well last until we have paid most of our waste water treatment plant, which could keep rates significantly lower, and hopefully carry us into better economic times. And we have already invested heavily in the foundations that will allow us to move quickly if we run into serious aquifer problems.”
— Sue Greenwald, Davis Vanguard, 09/03/2011
[url]https://davisvanguard.org/index.php?option=com_content&view=article&id=4658:director-of-wqcb-says-davis-cannot-delay-water-project&catid=58:budgetfiscal&Itemid=79[/url]
Don: those numbers for 2017 are from books cooked by people with a vested interest in creating the need for this overly large surface water plant, and making it look like a 911 emergency. Sorry, but we are just going to have to agree to disagree.
Hey Michael: Don has shown us the data to support his argument. Where is the data to support your’s?
Oh yeah, that’s right, you don’t have any.
Never mind.
[img]http://davismerchants.org/water/wellspreadsheet.jpg[/img]
[url]http://davismerchants.org/water/wellspreadsheet.jpg[/url]
This spreadsheet from December 2011 shows the high-selenium wells that are going to be taken out of the system (they are highlighted). Our monthly average production at that time was 367,325,674 gallons. We will be removing 145,675,383 gallons by ceasing the use of those 11 wells. The deep wells can replace most of that if
— they run 24/7 (which is not responsible), and
— if nothing goes wrong with any of them, and
— if they don’t interfere with UCD wells, and
— if nothing goes wrong with the deep aquifer, and
— if the city doesn’t add any housing whatsoever, and
— if the university doesn’t add any students.
If we find that isn’t enough water, we can’t pump any more water from the deep aquifer because of the EIR we have with UCD. Are you of the opinion that we can revise that? Matt has described the process. Good luck with that. So then we’re stuck.
Peak capacity issues mean brownouts. They mean that the city will have to implement urgent water-conservation rules. Based on reasonable expectations for conservation and growth of the city and campus, that problem comes in 2017. Nobody has cooked the books. It isn’t a matter of ‘agreeing to disagree’. Prove your assertion, or stop making it.
[quote]Mike: we are just going to have to agree to disagree. [/quote]
Not when you are clearly wrong and say things that are full of hate. Agreement in any form would imply that people support your behavior. Nope, can’t do that.
As we take the high-selenium wells out of production and shift to the deep wells, we don’t decrease the boron. Notes on the original of that spreadsheet that I got from the city showed totals for chromium6. We don’t solve that problem. We don’t solve the arsenic problem. And on and on. Shifting from one groundwater source to another doesn’t resolve our long-term water quality issues.
Mark: let’s go talk to those “expert” city staff who have worked on the data and analysis that you believe show that this project is needed, and it’s practically a 911 water emergency such that we have to join Woodland’s water train NOW.
Oh, these are the same staff who gave us the 9/11 bogus rates, and lied to us about there only being a 14% increase?
Or the ones who used city money to opine that the referendum was illegal?
Or the ones who have hidden from public view since at least 2010 that the City of Davis was freeloading off ratepayers and using water for free? Now we know why those greenbelts and park fields were routinely flooded with abandon by city staff, with no accountability. Because their department was not being charged with the water bill!
Go ahead and believe, Mark, that these so called experts and city leaders are working on this water project for the benefit of citywide residents, rich and poor. And I’ll send you a link to Disneyworld and the tooth fairy.
“The university’s overall enrollment — including graduate and professional students — increased by 647, or nearly 2 percent, from last fall’s 32,653.”
— Davis Enterprise, December 2, 2012.
” … the campus is in the early stages of studying whether it can add 5,000 more qualified undergraduate students in the next five years — with an appropriate and responsible mix of instate, out-of-state and international students — and support 300 new tenure-track faculty positions.”
–UC Davis News & Information, September 21, 2011
Mark: also, do we really need to say that any local wanna-be politician who wants higher office has to please certain groups and organizations? Cabaldon displeased some of these entities for some reason that I don’t remember, and look how Yamada suddenly and unexpectedly took him out in the last 2-3 weeks of the election for State Assembly?
[i]”Oh, these are the same staff who gave us the 9/11 bogus rates, and lied to us about there only being a 14% increase?”[/i]
They didn’t lie. Go look at the minutes of that meeting. Three options were put in front of the city council. One was an actual 14% increase. Another was the increase that the council approved, which was what the staff recommended. Their argument at the time was that it would be an ‘effective’ 14% increase due to conservation. The council could have approved a real 14% increase in rates, but chose not to.
The staff never lied about it. The council made a mistake, IMO, but for you to continue to imply that staff lied is exactly the sort of campaign misinformation we have been describing here over and over: you will make charges, impugning individuals, that are baseless.
And the JPA is viewed as a great place for professional water staff to go for retirement. They take their pensions from local agencies, and “retire” to their new job at the JPA, and pick up huge new salaries (look at Dennis Diemer, JPA Manager, now earning over $200 K per year for part time work there)?
Mark, open your eyes. This water project has benefits for all of the local politicos, business elites, and certain public employees and consultants. And it screws the poor and middle class in Davis and Woodland.
Why did water consultant Yost cavort for the cameras with Don Saylor at the podium when Saylor announced his run for County Supervisor?
Still want me to send you that tooth fairy link?
Mike: please explain how you believe we can meet peak capacity with just the deep wells, and provide the assumptions about growth and conservation that you are using to make your conclusion. You have often said that we can use the well water for many years to come. I have provided specific data that refutes that assertion. So please explain how we are going to do what you claim.
Mike Harrington: stop attacking people. Start providing facts and legitimate arguments.
[quote]Mike Harrington: Cabaldon displeased some of these entities for some reason that I don’t remember, and look how Yamada suddenly and unexpectedly took him out in the last 2-3 weeks of the election for State Assembly? [/quote]
Mike, as I recall, you pulled your support for Mariko and went with Cabaldon, because she had the audacity to not do you and your friends bidding. Mariko won because, instead of appealing to the Davis Progressives and their demands and bowing to their threats, she walked precincts in Davis, Vacaville and other areas of the district, talked to people in the community about the real issues that affected people and garnered widespread support. There was no unexpected result.
It is weird that you would support Cabaldon during the election, but denigrate him now. Cabaldon didn’t lose the election, because he displeased certain groups. He lost because Mariko ran a better campaign…without the support of you and your friends.
Michael: “[i]Mark, open your eyes.[/i]”
I am a scientist Michael and my eyes are wide open. I make decisions based on the data and so far you have failed to provide anything that will support your claims. I’m waiting, but don’t worry, I won’t hold my breath.
Since you guys still believe, here is a link for your reading:
http://en.wikipedia.org/wiki/Tooth_fairy
Don: on that 14% rate increase fiasco, go tell Dan Wolk. He later wrote somewhere that, in effect, he was duped.
Michael, here’s what they were presented:
[url]http://davismerchants.org/water/waterratesordinancesept6.png[/url]
Please answer my questions about how the wells are going to meet peak capacity. If you don’t have the answers handy, I’m sure you can ask someone on the No on I team to reply.
Michael: “[i]http://en.wikipedia.org/wiki/Tooth_fairy[/i]”
That’s great Michael! Thanks for finally showing us the data that supports your position (and here I didn’t think you had any).
“let our legacy to our children to be huge debts for a marginal need for water,…”
Mike what are you going to boil when you have the Tea Party?
Don,
There is a more recent study done by an outside consultant (Brown and Caldwell, April 5, 2012) that shows that the existing well system can easily meet 100 percent of daily demands, pressure goals, and City and regulatory benchmarks for selenium, boron, TDS, and hardness. This study was on the City website at one time, but it is no longer there. Here is Table 2 (see Run 2). The full report can be found at [url]http://daviswater.weebly.com/[/url]
[img]http://daviswater.weebly.com/uploads/1/7/5/5/17550059/tm4.jpg[/img]
Thank you for making my point even more clearly with updated information. The chart you link shows the deep wells running nearly 24 hours a day.
We meet minimum service requirement, just barely.
In the event of any problem with one of six wells, we no longer have what we need.
If the deep aquifer degrades, per benchmarks set in the EIR, we have a serious problem.
Boron increases.
Daily selenium ranging from 2.6 – 3.8 meet current discharge, but it is likely that selenium standards will be set lower in the near future.
I strongly question the use of your adjective “easily.”
By the way, note that well 31 has distribution problems, yet is shown at full capacity, and well 20 was drilled in 1976. These are the sorts of issues that continued total reliance on the groundwater will have us dealing with. We would be juggling water from various sources of different qualities, facing uncertainties due to age of some wells, interference problems of others. We would be constrained from using any more deep water by our EIR.
Mark West: I am a scientist Michael and my eyes are wide open. I make decisions based on the data and so far you have failed to provide anything that will support your claims. I’m waiting, but don’t worry, I won’t hold my breath.
Mark, I am not answering from any side but it looks like the NO side does believe we need surface water, just not as much of it. The problem is I do not know if we could get another plan/project going in time for when we need it and they have not provided much by way of feasible alternatives.
dlemongello: ” [i]it looks like the NO side does believe we need surface water, just not as much of it. The problem is I do not know if we could get another plan/project going in time for when we need it and they have not provided much by way of feasible alternatives.[/i]”
I think the data is quite clear on this subject and therefore I agree with the WAC. The proposed project that we are voting on in Measure I is the only viable option for meeting all of our needs.
The No on Everything team have not provided any meaningful alternatives and they have not provided any data to support their contentions. In my opinion the entirety of their argument is a shame intended to confuse the electorate. I understand that many people in town want to believe the claims of the opponents, but unfortunately, the only way to do so in my opinion is to ignore the experts, ignore the data, and ignore the best efforts of the members of the WAC. I will not do any of those things.
I am voting yes on Measure I because it is the right thing to do for Davis today, and for Davis in the future.
I’d also like to say something about our legacy. Let it be one of using sustainably LESS water. Cost could have encouraged that before, but it was still always too inexpensive. Now it’s too late, we have to pay even if we use less if we build this project because it has to be paid for no matter how little we use. As a group we are wasteful fools.
dlemongello: “[i]Now it’s too late, we have to pay even if we use less if we build this project because it has to be paid for no matter how little we use. As a group we are wasteful fools.[/i]”
I agree. We could have addressed this problem more than a decade ago at a much lower cost, and could have saved ourselves a great deal more by working on conservation up front. Unfortunately, we first had to replace the ‘No on Everything’ regressives on Council with folks mature enough to deal with our problems honestly. As it stands we have dithered over water so long that it will now be just as expensive whether we build this project or not. The only real question is ‘what do you want for your money, a solution or more dithering?’
“We could have addressed this problem more than a decade ago at a much lower cost”
We could have? How could we have addressed this problem a decade ago when we didn’t have the water rights until the last few years?
David: what might we have accomplished if we had agreed 10 years ago that we needed a surface water plant and had started paying for it immediately? What might we have accomplished if we had worked diligently on a regional solution? What might we have accomplished if we set a community goal to reduce our water consumption by 10% each year? Are you really going to argue that the results would be more expensive that now?
It was an honest question. I have long argued that we erred by not ramping up the rates in advance of the project.
I agree, you did in fact argue that position for some time. Unfortunately, you then shifted to a ‘not now’ position that put you in opposition to an honest solution.
Mr H asks: [quote]Did she say “let our legacy to our children to be huge debts for a marginal need for water, and a need that won’t be needed, if at all, for many years”?[/quote]Read the article… Lois did not say that in her article… ‘lies, damned lies, statistics’, and even worse, what Mr H writes…
What’s worse, he appears to quote her… I’m at the point where, if Mr H told me the sun would rise tomorrow, I’d plan on a VERY dark few years.
Does anyone have a clue if SWP is overpriced?
If you don’t think that it is overpriced, why not?
H. Seldon said . . .
[i]”Don, There is a more recent study done by an outside consultant (Brown and Caldwell, April 5, 2012) that shows that the existing well system can easily meet 100 percent of daily demands, pressure goals, and City and regulatory benchmarks for selenium, boron, TDS, and hardness. [b]This study was on the City website at one time, but it is no longer there.[/b]”[/i]
H. Seldon you are sounding a lot like Walt Sadler who concocted a fairy tale that, “One of the studies that was done that the WAC would not allow to come forward, showed that if we operated our wells appropriately we can meet the selenium requirement.”
Just like your bolded statement above, Walt’s fairy tale was incorrect.
With regard to Walt’s fabrication which he asserted most recently during the Vanguard Water Forum, Dianna Jensen provided the very information Walt said was withheld formally and officially to all WAC members in a Monday, March 19, 2012 11:14 AM e-mail that stated “Here are some additional reading materials suggested by Walter Sadler. I found the first three items, and Walter provided the fourth, but I cannot get my computer to open the link he provided. I’ve asked him to download the article and then I’ll forward a copy, in case others are having difficulty too. Dianna”
Regarding your fairy tale, the report you refer to has been and continues to be on the City website. The link to it is [url]http://public-works.cityofdavis.org/Media/PublicWorks/Documents/PDF/PW/Water/Documents/Davis-WQ-TM040512.pdf[/url]
Perhaps you should correct the record. If you do you will be a bigger man/woman than Walt has been to date. His response to me on Monday February 4th was, “Just for the record Matt, I’m not going to spend my time responding to your comments.”
Edgar Wai asked . . .
[i]”Does anyone have a clue if SWP is overpriced? If you don’t think that it is overpriced, why not?”[/i]
Edgar, at this point in time there is no “price” for the SWP, only cost [u]estimates[/u]. The reason that is the case is that there is no committed revenue stream in the form of rates that can give the bidding firms any assurance that they will get paid if they are awarded the contract. Not getting paid is a huge risk. Because of that risk, the typical practice in submitting bids on a large project like this one is to include a “risk premium” in the bids. Typically that risk premium is 25% or more. So the expected project costs of $245 million would be bid at something like $305 million with the risk premium included.
Once the five year rates are in place, there is an assured revenue stream that will fund any payments that come due for work completed. As a result the bidding firms will see no need for addition of a risk premium to their bids.
Credit rating agencies like Standard & Poor’s and Moody’s deal with the above described conundrum all the time. Absent a committed revenue stream they will only rate a municipality’s debt as General Obligation Bonds rather than Revenue Bonds. General Obligation Bonds have lower credit ratings than Revenue Bonds. Lower credit ratings mean higher interest rates. Higher interest rates mean higher annual debt service payments and higher interest costs. All of that is bad for Davis’ citizens. Therefore the two cities and the JPA are taking the necessary steps based on cost estimates to put in place the committed revenue stream that will result in 1) lower debt service, 2) lower interest costs, and 3) lower bids on the construction.
Does that answer your question?
Edgar, here is another perspective on whether or not the SWP is over priced.
When the SWP was downsized from 40 mgd to 30 mgd there was minimal cost reduction to the following components of the system
1) the intake facility in the Sacramento River,
2) right of way and land aquisition,
3) the raw water pipeline from the river to the treatment plant,
4) the treated water pipelines from the treatment plant to the two cities, and
5) the modifications that each city has to make to their existing distribution systems in order to receive the surface water and effectively blend the surface and groundwater together.
When capacity was reduced from 40 to 30 the cost reduction on those five items was minimal. If we further move the capacity from 30 to 24 (12 to 6 in the Davis share) the cost reduction on those five items would be zero because they have already been downsized as far as possible.
That means that the only place where further cost savings could be obtained would be in the treatment plant itself. The treatment plant costs have three major components,
A) the “soft costs” of environmental documents, permitting documents, engineering, design, legal counsel, agency administration and program management,
B) the building of the treatment facility’s shell (e.g. walls and roof and heating equipment and light fixtures, etc), and
C) the building of the treatment facility’s pipes and tanks and processes.
Downsizing from 30 to 24 will not reduce A) for self evident reasons. Downsizing from 30 to 24 will not reduce B) because it is much cheaper to build an original building a bit larger than it is to modify/expand the building at a later date. So that means the only place that we can reduce the treatment plant costs is in category C).
When going down from 40 to 30 we saw a decrease in treatment plant costs from $123.45 million to $105.03, which is almost exactly 15%. The capacity reduction was 25% in aggregate; however, if you look at just the Davis portion a 33% reduction (from 18 to 12) produced only a 15% savings.
In my opinion and in the opinion of engineers I have talked to, going from 30 to 24 will be unlikely to produce much more than a 5% savings because we have already squeezed down C) by grabbing all the easy savings. Further savings will be much harder to obtain. So, Davis would be reducing its portion of the capacity by 50% (from 12 to 6) and only realizing at most a 10% cost savings (double the 5% because the whole 5% aggregate savings would theoretically flow to Davis).
Now let’s look at an alternative scenario. Keep the plant at 12 mgd for Davis and aggressively pursue ASR as an incremental aspect of the project. As Kathleen Groody has pointed out, there are changes to the 45,000 acre foot water right that will have to be applied for and approved in order to move forward with ASR. That will take some time, but lets assume that those changes to the water right happen by the time the plant comes live in 2016. If we perfect an ASR storage addition to the then existing system we may well find ourselves with enough summer water that we do not need the Conaway Ranch 10,000 acre foot water right water. If that is the case we can sell that 10,000 acre feet water on the open market to any willing buyer at what amounts to a retail price. So what that means for me is that spending the extra 10% does for us is set up a “buy wholesale, sell retail” situation that we could not take advantage of if we only had 6 mgd of treatment capacity.
Alternatively, we can do as some of the more environmentally oriented citizens suggest, and simply not take the Conaway water from the river, but I don’t see how we can do that with only 6 mgd of treatment capacity.
David M. Greenwald asked . . .
[i]”We could have? How could we have addressed this problem a decade ago when we didn’t have the water rights until the last few years?”[/i]
David, we could have done exactly what we did with respect to Sewer in 2008. We began building up a CIP Fund Reserve so that a substantial portion of our eventual solution was prepaid. That would have spread the fiscal pain over ten more years than it currently is being spread over. The impact on individual citizens and their personal budgets would have been infinitely more manageable.
That is how.
Re: Matt
From your reply I learned of General Obligation Bonds and Revenue Bonds. You said that if the City can show a steady revenue, then the interest rate for the debt service payments will be less. In addition to lowering the interest rate, the City will lower the risk premium from bidding firms. Bidding firms add a risk premium when they suspect that the City may default on the debt service payment.
Is the common estimate that water bill would triple based on $245 million or $305 million?
For the cost estimation, regardless of the sizing, how do we know if each cost is not overestimated? As you said, regardless of the size of the plant, there is a cost estimated for “Engineering Design”. How do we know whether that cost is overestimated?
Is there a similar SWP constructed else where that we know the cost?
Does anyone care to comment on Bob Dunning’s assertion, in his column in the Davis Enterprise Wednesday, that summer rates (per unit volume) for water will be many-fold higher than winter rates?
If this is accurate, than I lament in advance the drying up of gardens and trees from lower-income areas of Davis, as the residents will not be able to afford such vastly increased water prices to keep their yards and trees from drying up in the summer.
How much merit is there to Dunning’s assertions about huge increases in summer water rates?
The way I understand it is the previous summer (May-Oct) usage in ccf will determine the supply charge part of the rates all year long and the per ccf used in any given month rate (cost per ccf used) will remain constant. These will be added to the fixed rate every month to total your monthly bill.
I cannot read the Enterprise. But if you consider the payment going out of a water user to a water agency, and the amount of water used, you would get a conclusion like this, even with hypothetical numbers:
o A uses 30 units in winter and 0 unit in the summer. There is no supply charge. A pays $30 total.
o B uses 0 units in the winter and 30 units in the summer. Three is a supply charge of $60. B pays $90 total, where $30 corresponds to the Use charge, and $60 corresponds to the Supply charge.
Conclusion:
o A pays $1/unit of water used, which he used in winter
o B pays $3/unit of water used, which he used in summer
From the perspective of the water user, the entire water system is just one black box. There is no dogmatic reason on why the user needs to know anything about how the water system works. It is possible design a water supply system where the costs are directly proportional to use.
When such a system is not designed, it is possible to design the rate structure where each user pays a fixed rate proportional to use.
A community can always be dogmatic and enforce a fixed rate, so that the transaction from user to agency is always proportional to amount of water used.
The only question that remains, then, is if such a rate structure is fair. Just because each person is paying proportionally does not necessarily imply that everyone is paying a fair share.
Just to clarify:
o Proportional billing does not result in a fair distribution of the costs
o CBFR also does not result in a fair distribution of the costs
o With a defined meaning of fairness, a fair rate can be [b]derived[/b]
As a result, it is possible to compare Proportional Billing and CBFR in terms of fairness objectively.
jimt said . . .
[i]”Does anyone care to comment on Bob Dunning’s assertion, in his column in the Davis Enterprise Wednesday, that summer rates (per unit volume) for water will be many-fold higher than winter rates?
If this is accurate, than I lament in advance the drying up of gardens and trees from lower-income areas of Davis, as the residents will not be able to afford such vastly increased water prices to keep their yards and trees from drying up in the summer.
How much merit is there to Dunning’s assertions about huge increases in summer water rates?”[/i]
Jim, if you go to [url]http://www.davisenterprise.com/forum/opinion-columns/fixed-rate-is-systems-mortgage/[/url] you will get a simple answer . . . which can be summed up with two words “no merit.”
Matt, in the link above, that’s a great analogy/explanation. I also have another question. You’ve said (if I understand correctly) that downsizing the thing much more would not result in significant savings. So let’s say we decided before building that we know peak demand is not gong to be what is used to be, everyone is going to conserve more than the built-in conservation estimates (is it 21% or 25%?) and a smaller plant would provide enough water. How could we save proportionately, since this whole thing is based on proportionality?
[b]Objective Comparison of Fairness: CBFR vs Proportional[/b] [Link] ([url]http://skylet.net/docs/2013-02-14-2203-FairnessComparison.htm[/url])
Conclusion: although both of them are unfair, Proportional is worse than CBFR for the typical use patterns because it subsidizes uneven uses of water. In Proportional billing, people who use less water in the summer are subsidizing those who use more water in the summer.
Re: Matt
In reference to this table ([url]http://skylet.net/docs/2013-02-14-2203-FairnessComparison.htm[/url]), please compare Pattern 3 and Pattern 4, where user B changed his water user behavior from summer-heavy to winter-heavy. According to CBFR, B will save money (in the expense of A and C each paying more). However, this change in behavior does not affect the agency costs, because by then the water plant is [b]already built[/b]. When B shifts his water use to winter, all he had done is to shift some of the excess capacity from winter to summer. There is no actual saving to the system.
According to Equal Discount billing, this shift in B’s behavior will not affect anyone’s bill, because the behavior change did not save the system anything.
According to CBFR, the behavior will be incentivized, in the expenses of A and C, when there is no saving incurred to the system. The design of CBFR is incorrect.
Edgar, what life style change would cause user B to change his water user behavior from summer-heavy to winter-heavy?
If you are going to put forward scenarios, they should at least have a reasonable chance of happening in real life.
Edgar Wai said . . .
[i]”From the perspective of the water user, [b]the entire water system is just one black box[/b]. There is no dogmatic reason on why the user needs to know anything about how the water system works.”[/i]
Edgar, your bolded words above are antithetical to the whole concept of transparent, open, participative government. If the water system is indeed just one black box, why did we even have a Water Advisory Committee?
Edgar Wai said . . .
[i”It is possible design a water supply system where the costs are directly proportional to use.”[/i]
Easier said than done. How are monthly account billing and collection costs proportional to use? How are fire hydrant water delivery costs proportional to use? How are fire hydrant water standby costs proportional to use? How are meter replacement costs proportional to use?
Re: Matt
[b]On how proportional rates can cover all costs[/b]
If you read my table here ([url]http://skylet.net/docs/2013-02-14-2203-FairnessComparison.htm[/url]), you will see exactly how all three billing methods can cover the costs.
[b]On “Black box”[/b]
The context of my statement was referring to how proportional billing rates are derived. It is derived by summing all costs in to an indistinguishable lump, then distribute it proportionally according to water used by each user. In the derivation of the rates, the details about how much is for the fixed cost, how much is for the variable cost, etc… (the details that the agency knows), are irrelevant. They are all combined into a single number. It was not a statement about transparency or accountability. It was a statement about the mathematical derivation.
[b]On Obstacles to Changes[/b]
According to the meaning of your reply, you agree that CBFR is incorrect. On my table, I showed you Equal Discount billing method, which has the same effect as CBFR if every one is a summer-heavy user, [b]and[/b] does not have the incorrect behaviors that CBFR has. Equal Discount is correct when CBFR is correct, and it stays correct when CBFR is incorrect.
According to our email conversation, the only reason CBFR remains on the table is that CC/WAC decides that it is too late to change. Do you confirm that this was the reason why CBFR remains?
In the email I think you listed five reasons, the reasons include:
o It is too late to change it
o That people won’t understand the more correct version
Some of the other reasons you listed were logically invalid:
o The current meters are bi-monthly (irrelevant)
o Equal Discount would over-bill the users (incorrect)
o There are only less than 10 accounts in Davis that have winter-heavy pattern (invalid)
Whether an error should be fixed, should be determined by comparing the risk of not fixing it and the cost of fixing it. In our context, the cost of fixing it is insignificant. For the risk, I do not trust myself to know everything about the future or how people will behave. All I know is that since the cost to fix the problem is small, if I fix the problem now, I don’t need to worry about being surprised later. We should be proactive and fix it now before people start to be billed using that system. When people start to be billed with CBFR, the damage could start to incur.
[b]On Realistic Scenarioes[/b]
It is unnecessary to know the realistic scenario to fix loopholes in policies. Realistic scenarios substantiate the threat of loopholes, but the absence of realistic scenarios does not eliminate the loopholes. Loopholes can only be eliminated by a logical proof of their impossibility. Lack of evidences and imagination are not logical proofs.
Here are some scenarios where someone could exploit the loophole where winter usage is dogmatically subsidized. The damage of each scenario depends on the intensity per user, and the number of users that would do so.
1. A user who had invested in a water tank
2. A user with a business plan to store water in winter and sell in the summer
3. A user with a business plan that makes paint in the winter and paints in the summer.
4. A user with a business plan to use water to power heaters in the winter.
5. A user with a business plan to build temporary skating rinks or artificial snow playground in winter.
6. A user with little use of water, who can afford to use no water at all in the summer just to get a cheaper bill for the whole year.
7. A developer who currently owns a land, that relies on the billing pressure of the water system to persuade the voters to let them develop their land.
8. A firm with a patented large-scale water storage system that is integrated with apartment complexes. A profit cannot be made unless the water use in winter is subsidized.
How much is the cost of fixing the loophole?
[b]On transparency and accountability[/b]
When I tell you there is a loophole in the system, I am trying to participate. However, what I seem to see is that my participation has no effect. Do you understand why this dynamics happens?
One’s participation might help them resolve their concerns. But that does not imply that everyone else’s concerns are also resolved. Therefore, at every stage, there is a sense of humble acceptance that regardless how much time they have spent in a committee to resolve issues, they are only resolving issues that they identified. There is always a possibility that there is an additional concern that is not addressed.
A way for a committee to tell if their work is done, is to have a [b]survey[/b] to poll how people think about the issue, and what other concerns there are. And expand the coverage when new concerns are identified. This type of behavior is beyond transparency and accountability. I don’t know what to call this–the intention to proactively seek out oppositions to address their concerns.
How should a committee react when someone thinks a loophole should be fixed, and is actively explaining how to fix it at no cost?
Edgar Wai said . . .
[i]”On “Black box”
The context of my statement was referring to how proportional billing rates are derived. It is derived by summing all costs in to an indistinguishable lump,[b] then distribute it proportionally according to water used by each user[/b]. In the derivation of the rates, the details about how much is for the fixed cost, how much is for the variable cost, etc… (the details that the agency knows), are irrelevant. They are all combined into a single number. It was not a statement about transparency or accountability. It was a statement about the mathematical derivation.”[/i]
Edgar, what is used is only half of the story. You are not including the other half of the story, which is the water that is “reserved” by each user. That “reservation” of water also has a proportional cost. Overall proportionality is a blend of A) the actual use and B) the reserved use. Just like when you reserve a half hour appointment with your lawyer, if you do not show up, you are still going to get a bill for the half hour because the lawyer took that half hour out of inventory when you reserved it. Hairdressers work the same way. The Mondavi Art Center works the same way. Reservations have a cost.
Edgar Wai said . . .
[i]”According to our email conversation, the only reason CBFR remains on the table is that CC/WAC decides that it is too late to change. Do you confirm that this was the reason why CBFR remains?”[/i]
No, no, no, no, no, no, no. In Chicago, or any other non-irrigation heavy city, CBFR would almost surely use the annual consumption algorithm within the Supply Charge because annual consumption is the best proxy for the decisions that have been made when designing the system and incurring the costs to build the system.
As I said to you in the e-mail conversation, if you follow your algorithm in an irrigation heavy water district you are going to build a plant that is significantly larger than the city needs. My question to you in the e-mail thread was “Why do you want to build that wasted capacity?” or said another way, “Why do you want to incur costs for capacity that will never be used?”
In your hypothetical scenario you are insisting that you build a plant that has 70 units of water capacity (40 plus 30), but the peak demand is only 50 units of capacity (40 plus 10). Why spend the money to build that extra 20 units of capacity that will never be used?
Edgar, to put this discussion into a broader perspective here is an early comment that we received from a Southern California water district. Bottom-line, there isn’t a one size fits all solution. I don’t agree with all the points that the commenter makes, but his/her comments do illuminate the complexities of the real situations that agencies face. The CBFR model is robust enough to be able to be tailored to the cost structure of each individual water district.
[i]”Supply reliability costs involve the distribution system. For example, a water agency’s distribution system is built on an interconnected grid, so if part of that grid goes down, customers still get water. The cost of distribution system reliability is separate from peak summer use.
For example the main selling point for Metropolitan Water District’s (MWD) massive investment in Diamond Valley Lake (DVL) was that if the state water project and the Colorado River aqueducts were damaged in an earthquake, MWD would be able to maintain a certain level of reliability because the gravity feed system of DVL can reach almost all of MWD’s service area; this cost has nothing to do with peak summer use.
Fundamentally, there must be a dozen ways to justify how fixed costs get allocated. For example, one of the most fair ways to allocate fixed costs would be based how many miles of distribution system are needed to serve a particular customer. For example, if your home is right next to your water agency’s well, but someone else using the well water is 10 miles away, why should you have to help pay for 10 miles of distribution system? I am not advocating this type of allocation, I’m only saying there are many paths we can go down and, quite frankly, most of them are, out of necessity, contrived.
My current thinking is that the great differences between water agencies (different fixed costs to variable costs ratios; different supply reliability costs; different peaking factors; different political climates; firm demand vs. interruptable demand, etc.) means a one-size fits all approach would be ineffective/ suboptimal.”[/i]
[b]On the Fundamental Concept of Proportional Billing[/b] [Re] ([url]https://davisvanguard.org/index.php?option=com_content&view=article&id=6112:let-our-legacy-be-clean-water&catid=50:elections&Itemid=83&cpage=30#comment-176297[/url])
Context: I was comparing the fairness of CBFR and Proportional using Equal Discount. The conclusion was that both CBFR and Proportional billing are unfair. Matt asks further questions about proportional billing, and here I provide the answers.
The fundamental principle of proportional billing is to consolidate costs into a single number and divide it by a quantifiable notion of use to get a billing rate in the form $/use. The fact that the billing gets condensed into this simple statement…
“The rate is $X/use. If you use 10, then your bill is $10X.”
… does not mean that every single cost is directly proportional to use. Because of this, Proportional billing is inherently unfair. Its advantage is that it simplifies the calculation, and allows a user to accurately predict how much he will pay for a service (as opposed to being charged fees that he can’t understand). It strength is in its predictability from the perspective of the user.
Example by scenario with numbers:
[i]A water system is committed to provide readily available water to every house. From the perspective of the water system, the cost of keeping water ready is proportional to the size of the pipe connected to the house. For simplicity, let’s say that the yearly cost is proportional to the diameter of pipe size and equals $10 per inch. When water is used, there is a cost directly proportional to the volume consumed. In our hypothetical city, that cost happens to be $1/ccf. There is also a fixed personnel cost of $100 per year, and a fixed debt service payment to pay for the construction of the water plant. The total debt is $1000 for 10 years. The debt service per year is $100. The cost of construction is proportional to the peak capacity at a rate of $10/ccf. This water plant is built with a maximum capacity of 100 ccf.[/i]
That’s a lot of rates in one paragraph. Here is a summary:
o Ready-Distribution Cost: $10/inch
o Water Treatment Cost: $1/ccf
o Staff Salary Cost: $100/year
o Debt Service Cost: $100/year
In order to know how large the plant needs to be, the water agency already has some historical record to predict the water use in the near future. The City they serve has three water users, and the prediction is this:
o A: 1″ pipe: Winter: 30, Summer: 10
o B: 2″ pipe: Winter: 10, Summer: 40
o C: 3″ pipe: Winter: 20, Summer: 30
For this pattern, the peak use is 80 ccf in the summer while the plant is sized to have capacity of 100 ccf. In this scenario, the plant is designed to have a capacity larger than what is needed currently to allow some growth. With these numbers, is it possible to calculate how much a flat rate to charge everyone so that the revenue is covered:
o Ready-Distribution Cost: $10 x (1 + 2 + 3) = $60
o Water Treatment Cost: $1 x (140) = $140
o Staff Salary Cost: $100
o Debt Service Cost: $100
o TOTAL = $400
o Equivalent Rate = $400/140 = $2.86/ccf
The estimated total cost is $400. The estimated total consumption is 140 ccf. This gives an equivalent rate of $2.86/ccf. Now, instead of telling the users about the various costs that the water agency sees, the water agency could give simply give A, B, C the flat rate of $2.86/ccf, and ask they whether that rate is acceptable. The users compute their own bills:
o A: Total Use = 40 (28%), Water Bill = $114 (28%)
o B: Total Use = 50 (36%), Water Bill = $143 (36%)
o C: Total Use = 50 (36%), Water Bill = $143 (36%)
The precentages of use and their bills all match. The payments sum to $400. From the perspective of the users, this is simple, and predictable, and [i]appears[/i] fair.
Qualitatively, the existence unfairness can be expressed in these questions:
[i]A asks: “The plant was sized for the peak capacity in the summer. I use little water in the summer, why do I have the same rate as everyone? Shouldn’t my rate be lower?”[/i]
[i]B asks: “My pipe is smaller than C’s, why isn’t my rate lower than C’s?”[/i]
[i]C asks: “I don’t use as much water as B does in the summer, why do I have the same rate as B does?”[/i]
Quantitatively, these unfairness can be computed by Equal Discount billing method.
Conclusion: The purpose of this reply is to show the meaning of proportional billing from the perspective of lay-people. The result of proportional billing may not be fair, but its simplicity makes it easy for the user to budget water use.
On an earlier example [Re] ([url]https://davisvanguard.org/index.php?option=com_content&view=article&id=6112:let-our-legacy-be-clean-water&catid=50:elections&Itemid=83&cpage=30#comment-176300[/url])
Context: I asked Matt to confirm if CBFR stays in the proposal because the city council and/or WAC decided that it was too late to change it. Matt replied that CBFR with annual consumption algorithm for the Supply Charge is the best for a city like Chicago, but not for a city that is irrigation heavy. Matt also said that my algorithm would result in wasted capacity.
My intention: I want to let Matt know that his reference to Chicago was incomplete so that he could complete his reasoning supporting CBFR. I also want Matt to know that he misunderstood my algorithm.
[b]Incomplete Logic:[/b]
[quote]In Chicago, or any other non-irrigation heavy city, CBFR would almost surely use the annual consumption algorithm within the Supply Charge because annual consumption is the best proxy for the decisions that have been made when designing the system and incurring the costs to build the system.[/quote]
In the statement above, there is no actual reason given on why “annual consumption algorithm” is not also the best proxy for irrigation heavy city. To complete the argument, the speaker would need to explain how annual consumption algorithm works, and why it fails in an irrigation heavy city.
It is possible that annual consumption algorithm is different from Equal Discount algorithm, and the speaker had confused the two.
[b]Equal Discount Algorithm:[/b]
Early in the discussion ([url]https://davisvanguard.org/index.php?option=com_content&view=article&id=6098:designers-of-cbfr-respond-to-dunning-claims-about-proportionality&catid=50:elections&Itemid=83#comment-175717[/url]). The following scenario was proposed to highlight the difference between CBFR and Equal Discount.
The water usage pattern was this:
o A: Winter 10, Summer 40
o B: Winter 30, Summer 10
o The peak capacity is 50 in the summer
o The construction cost proportional to the peak capacity.
According to the design of CBFR ([url]https://davisvanguard.org/index.php?option=com_content&view=article&id=6098:designers-of-cbfr-respond-to-dunning-claims-about-proportionality&catid=50:elections&Itemid=83#comment-175727[/url]), A would pay 80%, while B would pay 20% for the construction cost.
According to the design of Equal Discount ([url]https://davisvanguard.org/index.php?option=com_content&view=article&id=6098:designers-of-cbfr-respond-to-dunning-claims-about-proportionality&catid=50:elections&Itemid=83&cpage=30#comment-175769[/url]), A would pay 57%, while B would pay 43%.
In both cases, there is no excess payment. Both algorithm are designed to pay for the same system, which has a peak capacity of 50.
[b]On Comparing Complexity Scalability of Billing Algorithms[/b] [Re] ([url]https://davisvanguard.org/index.php?option=com_content&view=article&id=6112:let-our-legacy-be-clean-water&catid=50:elections&Itemid=83&cpage=30#comment-176319[/url])
Context: In our discussion, Matt expressed the perspective that there is no one size fits all solution in water rate design. He referred to a comment received from a colleague in water rate design, and expresses the perspective that since there is no one size fits all solution, when CBFR is applied, it is modified to fit the cost structure of each water district.
My Intention: I want to compare CBFR and Equal Discount at different levels of granularity to see if there is a clear difference between the cost in their application.
[i]Tentative Definition:[/i]
A one size fits all solution, is a solution with a consistent framework with a complexity that does not grow as fast as the growth of the complexity of the problem. To evaluate two algorithms in terms of their “one-size-fits-all-ness”, is to evaluate:
1. Existence of Framework: Does the algorithm have a framework?
2. Existence of Solution: Can the algorithm solve the problem?
3. Complexity Scalability: How well does the algorithm handle problems with increasing complexity?
These are potentially very difficult questions to define and quantify. As a start to answer this question, in the following I will define the framework of Equal Discount algorithm, then I will apply Equal Discount algorithm for each scenario. For each scenario, I will list the factors that contribute to the costs, and the data that the algorithm must gather in order to compute a solution. I intend to mostly talk only about Equal Discount algorithm, because I do not claim to know framework of CBFR. I think that half of the analysis is better done by Matt.
[u]The Framework of Equal Discount Algorithm:[/u]
Principle:
The system cost is distributed so that every paying entity receives the same discount from sharing a system.
Algorithm:
Step 1. For each payer, compute the individual cost if the system is built to meet their individual needs
Step 2. Sum the individual costs from Step 1
Step 3. Compute the cooperative system cost if the system is shared by the payers
Step 4. Divide the value from Step 3 by the value from Step 2
Step 5. For each payer, their share of the payment is their individual cost from Step 1 times the factor from Step 4
To show my current understanding of CBFR:
Principle: ???
Algorithm: ???
In short, I do not know the general framework of CBFR.
In all of the scenarios below, these assumptions are used:
Water use pattern is:
o A: Winter:10, Summer:40
o B: Winter:30, Summer:10
[u]Scenario 1:[/u]
About the system:
o The cost of the system is proportional to the peak capacity at a rate of $10/ccf
Complexity of Problem: (Complexity of computing the total system cost)
o Number of Mathematical Operations: Add:2, Max:1, Multiply:1
o Total = 4
Complexity of Solution:
o Number of Mathematical Operations: Add:3, Max:3, Multiple:5, Divide:1
o Total = 12
Complexity Ratio = 3
[u]Scenario 2:[/u]
About the system:
o In addition to the cost in Scenario 1, there is a distribution charge proportional to the distance from the water plant to the user. The charge is $10/mile.
o The topology is such that the pipe runs 1 mile from the plant to A, then another mile from A to B. (i.e. Plant –1mile–> A –1mile–> B)
Complexity of Problem:
o Add:3, Max:1, Multiply:2
o Total = 6
Complexity of Solution:
o Add:6, Max:3, Multiple:8, Divide:1
o Total = 18
Complexity Ratio = 2
[u]Scenario 3:[/u]
About the system:
o In addition to the cost in Scenario 2, the pipe has an additional charge proportional to its diameter.
o The diameter needed for the pipe is proportional to the amount of water that passes it in a season. The cost is $1/ccf/mile
Complexity of Problem:
o Add:6, Max:3, Multiply:3
o Total = 12
Complexity of Solution:
o Add:11, Max:5, Multiple:11, Divide:1
o Total = 28
Complexity Ratio = 2.33
* * *
With an analysis like this, it is possible to compare the robustness of an algorithm. In these three scenarios, since Equal Discount algorithm can still be applied with an unchanging framework, it is still a candidate as a universal algorithm.