By E. Roberts Musser
Since the surface water project has been front and center in the local news lately, it would seem an article on how to read your city utility bill would be quite timely. The Dept. of Public Works held a seminar on the subject at our most recent Davis Senior Citizens Commission meeting on Sept. 8, 2011. It proved to be an interesting discussion.
As the reader can plainly see, approved water rate increases for an average residential household were decreased from $192.75 by year 5, to $136.00. But there were moderate increases in sanitation and sewer rates as well. So if your bi-monthly city services bill was $241.82, by year 5 it will total $336.29. This does not reflect an additional 14% increase in water rates that may be necessary in year 6. It also assumes a 5.5% interest rate on borrowed funds to pay for the surface water project, as well as favorable contract terms to build. By this time next year, hopefully many of the specific unknowns of the surface water project should be known.
So let’s take a look at a sample utility bill:
But as you can tell, if a household keeps their water consumption to no more than 27ccf (centum cubic feet = 100 cubic feet), they will remain within Tier 1 water conservation rates, @ $1.90 per billing unit (748 gallons). Once a household goes above 27ccf, it must pay the higher rate of $2.46 per billing unit. Thus there is a built in dollar incentive to conserve water. The Retrofit Charge will disappear by October, since the city will have fully paid for the installation of water meters.
Most residential homes have a ¾” meter size, and so pay residential rates. Apartment complexes or businesses that have a larger 3″ meter size will pay much higher commercial rates. It is also important to look at the water usage history in the upper left hand corner of your city utility bill. It gives an indication of how much water was consumed the previous year in the same billing cycle as compared to how much water was consumed this year. Water leaks can be detected in this way.
It should be noted it is very likely the city will go to monthly billing, to better help consumers budget their monthly expenses. There are also rebate programs through the city for low flow toilets, and washing machines that conserve water. Keeping an eye on irrigation systems will be imperative to keep water costs down. Or better yet, think about yanking out that front lawn and replanting it with drought tolerant shrubbery and ground cover (this is what I have done). Ironically, the city may have to consider doing this as well on some municipal property.
Sewer rates are based on winter water consumption from November through February, when normally there is no irrigation taking place. There is a base rate, then a consumption charge per dwelling unit. The city is also mulling over the idea of basing garbage pick-up (curbside sanitation) on consumption.
Water in CA is going to be more precious than gold figuratively speaking, as it becomes scarcer. It behooves everyone to better manage their consumption of this commodity by carefully monitoring their city utility bill. Also check out the city’s water rate calculator on the City of Davis website at:
http://cityofdavis.org/pw/water/water-calculator.cfm.
Elaine Roberts Musser is an attorney who concentrates her efforts on elder law and aging issues, especially in regard to consumer affairs. If you have a comment or particular question or topic you would like to see addressed in this column, please make your observations at the end of this article in the comment section.
It’s likely that many people will not be able to pay their city utilities bill, due to individual financial crisis that are statistically certain to occur with thousands of rate payers.
What happens to these people? Does their water and sewer get cut off?
Does the city seize their house?
To J.R.: I worry about that too, and is the reason why I want the city to continue looking into some type of low income relief fund. But in this economy, there doesn’t seem to be any source of funding for such a program. Therefore water conservation is going to be key. I literally yanked out my front lawn, and now water my bushes by hand. My water use is down to 7 ccf the last two months – well below the 27 ccf Tier 1 standard. It is amazing how much water you can conserve if you really, really try.
Also, a citizen advisory panel will be formed, to act as a watchdog group, to keep the costs of the surface water project to a bare minimum and keep water rates as low as is conceivably possible. A citizen advisory group was successful reducing the water rate increases from 3.5 times what they are now to only double. Double is not pretty, but it is considerably better than 3.5 times the current rates.
What is also important to understand is water is only a portion of your city utility bill. A lot is taken up by garbage, sewer, public safety tax, storm sewer, municipal tax, which you will still have to pay. City services are crucial but expensive, as we all know. However, if we don’t do the surface water project, I am not particularly convinced in the long run we are going to somehow “save” money as some have claimed. My guess is we will end up paying considerably more for the surface water project, that will be necessary eventually no matter what detractors would like to think.
If you want to lay blame, if blame you must – complain to the environmentalists who insisted on such stringent/draconian water quality discharge standards back in 1972. Interestingly, some who are against the surface water project are ardent environmentalists. I’m not quite sure how they justify their positions – “Yes we want a cleaner environment, but not if it hits our own pocketbooks?” Perhaps I am looking at their view too narrowly – so anyone can jump in and correct me if they feel my statement is unjustified.
Just as a point of reference, if you look at the above bill, only about $75 out of the approximately $230 is for water consumption…
ERM, you keep saying how we can keep our bills somewhat under control if we practice conservation. I agree if a minority of the ratepayers follow suit, but what if many go that route? I mean it will be a fixed cost for the project and the money has to come from somewhere. So if we’re all good little Davisites and Xeriscape (for the homeowners that can afford to) or just let our lawns and gardens die our rates WILL HAVE TO GO UP TO PAY THE BONDS. So we all will still end up paying a lot more and Davis will look like sheeeet. What am I missing here?
[quote]The Retrofit Charge will disappear by October, since the city will have fully paid for the installation of water meters.– [b]E.Roberts Musser[/b][/quote]This a great example of the benefits of phasing in large capitol improvements projects. It is because payments actually go down after the project (in this case installation of water meters) is paid for. This allows new charges for the next project to be imposed with lower overall rates than would otherwise be expected.
[quote]Once a household goes above 27ccf, it must pay the higher rate of $2.46 per billing unit. Thus there is a built in dollar incentive to conserve water.–[b]E. Roberts Musser[/b][/quote]This is misleading, since we are talking about future rates. When the rates skyrocket, everyone will conserve. But the city will have to come up with the money to pay the fixed costs of the new surface water project. So the rates will have to go up even if people conserve.
In fact, households that conserve today will see much bigger than projected spike in rates than the average predicted percentage spike.
A note about conservation and rates. In the 1970’s drought, in the Bay Area folks were giving up watering lawns, flushing only when necessary, using washing machine water to water plants, etc and conserved a lot. The rates went up then because there needed to be a certain mat $ to operate the plants, etc. So unfortunately conservation does not naturally lead to lower rates, although a good thing to do.
A gentle question about Elaine advocating for the latest rate vote (and against the referendum) while authoring a piece on the blog. Given the chatter yesterday about David not able to public ally taking a stand on the referendum and election, how can Elaine?
[b]E. Roberts Musser:[/b]
Under current assumptions, there isn’t a “possibility” that there will be another 14% increase in year 6 – under current assumptions there [b]WILL[/b] be another increase in year six. People in the field that I have been talking with actually think ultimate project costs will be much higher, and we haven’t factored in probable large storm water cost increases, unfunded liability of sanitation workers, etc.
Now, you are talking about bi-monthly rates here (you should have labeled the chart if you are trying to clarify the billing to the public).
When I do the math, if we add 14% to the 2016 rates, the yearly total comes to – hold on to your hats — $2,300 a year. This would mean that your touted rate reduction means that rates will be identical to the original projected rates, but will reach them only one year later.
I have been waiting for Paul Navazio to return from his (much deserved) two week vacation to confirm the accurate figures on where rates will in up in year 6 relative to where they were before the “rate reduction”, but it appears at first glance that there is no reduction – only a one year delay.
And remember, part of the achievement in the one year delay was due to delaying needed capital improvement costs that need to be done within the decade anyway.
There is a simple principle that you and staff and the council have failed to explain to the public. That is, once we distribute the bonds, we have to start paying about $10 million interest a year. So, if we delay the raises, we have to make it up.
That is why, even though we have changed some assumptions on interest rates and delayed paying for a few needed improvements for a few years, we have not decreased our rates – we have only delayed the increases a bit and reached the original projected rates only one year later. And we will need further increases to pay for the delayed needed improvements.
[quote]ERM, you keep saying how we can keep our bills somewhat under control if we practice conservation. I agree if a minority of the ratepayers follow suit, but what if many go that route? I mean it will be a fixed cost for the project and the money has to come from somewhere. So if we’re all good little Davisites and Xeriscape (for the homeowners that can afford to) or just let our lawns and gardens die our rates WILL HAVE TO GO UP TO PAY THE BONDS. So we all will still end up paying a lot more and Davis will look like sheeeet. What am I missing here?[/quote]
Actually there are many rate payers who will not conserve because they can afford any water rate increases; and there are many businesses who cannot conserve water. Than helps the average resident, who can make a dent in their water bill by doing things like replacing their front lawns with drought tolerant plants. My consumption of water was reduced dramatically, so I’m going to do the same thing in my back yard.
[quote]This a great example of the benefits of phasing in large capitol improvements projects. It is because payments actually go down after the project (in this case installation of water meters) is paid for. This allows new charges for the next project to be imposed with lower overall rates than would otherwise be expected.[/quote]
We were paying for the increase in sewer rates at the same time we were paying for the installation of the water meters. Secondly, we are talking about a meter installation charge of less than $5 per month, hardly making your case.
[quote]A gentle question about Elaine advocating for the latest rate vote (and against the referendum) while authoring a piece on the blog. Given the chatter yesterday about David not able to public ally taking a stand on the referendum and election, how can Elaine?[/quote]
I’m not a 501(3)(c). The Vanguard is, and therefore must abide by certain rules. It may not advocate voting a certain way. IMO, the Vanguard has crossed the line into advocating for people to vote “NO” on the surface water project if there is a referendum. The Vanguard’s position, I believe, is that there is technically no referendum in place. I know I would have no problem making the argument in a court of law that in effect the Vanguard is advocating for citizens to vote a certain way. If the Vanguard has sought legal advice on this issue that differs w mine, or chooses to take the risk bc they do not feel anyone will call them on it, that is entirely the Vanguard’s choice. My opinion is based on what I know about 501(3)(c)’s and my legal instincts, and in no way is a reflection of my position on the issue at hand. I would feel the same way if the Vanguard were in favor of the project…
[quote]Under current assumptions, there isn’t a “possibility” that there will be another 14% increase in year 6 – under current assumptions there WILL be another increase in year six. [/quote]
Not necessarily. Another Prop 218 notice has to be had, and ratepayers can protest the additional rate hikes. There can also be a referendum if the protest is not successful.
[quote]People in the field that I have been talking with actually think ultimate project costs will be much higher, and we haven’t factored in probable large storm water cost increases, unfunded liability of sanitation workers, etc. [/quote]
Unnamed sources again?
[quote]Now, you are talking about bi-monthly rates here (you should have labeled the chart if you are trying to clarify the billing to the public). [/quote]
From the article it is quite clear the billing is bi-monthly:
[quote]So if your bi-monthly city services bill was $241.82,[/quote]
[quote]When I do the math, if we add 14% to the 2016 rates, the yearly total comes to – hold on to your hats — $2,300 a year. This would mean that your touted rate reduction means that rates will be identical to the original projected rates, but will reach them only one year later. [/quote]
How could you possibly come up with the same figures for the rate reduction versus the Prop 218 notice rates? Here are the table of figures:
Y1 Y2 Y3 Y4 Y5
Prop 218 28% 28% 19% 19% 19%
Approved 14% 14% 14% 14% 14%
[quote]And remember, part of the achievement in the one year delay was due to delaying needed capital improvement costs that need to be done within the decade anyway.[/quote]
Aren’t you for delay?
[quote]There is a simple principle that you and staff and the council have failed to explain to the public. That is, once we distribute the bonds, we have to start paying about $10 million interest a year. So, if we delay the raises, we have to make it up. [/quote]
There are a number of principles that you, AS AN ELECTED CITY OFFICIAL, have failed to explain to the public:
1) Delaying may result in steep fines from the SWRCB.
2) Delaying may result in the deep level aquifer subsiding, being too contaminated to avoid fines.
3) Delaying and building the wastewater treatment plant first will not get us the necessary cost savings in the wastewater treatment plant – even the two experts you insisted the city consult have said this.
4) Delaying will probably make the entire project MORE COSTLY, bc interest rates/construction costs will increase, and the additional costs of drilling deep wells will have to be factored in when the mid and deep level aquifer wells give out/become too contaminated.
[quote]That is why, even though we have changed some assumptions on interest rates and delayed paying for a few needed improvements for a few years, we have not decreased our rates – we have only delayed the increases a bit and reached the original projected rates only one year later. And we will need further increases to pay for the delayed needed improvements. [/quote]
There is no other way than to characterize this as DISINFORMATION.