Whether you favor or oppose the current water project that will be on the ballot in March 2013, the public deserves accurate information and a fair debate.
Earlier this week, columnist Bob Dunning once again made an inaccurate statement: “If my water rates are locked in for a solid year based on how much water I used 12 months ago, the incentive to conserve is dramatically reduced.”
There will be a lot of discussion on the Loge-Williams rates. Council has moved up their discussion from January to the next council meeting.
However, Bob Dunning’s argument is that the incentive to conserve is dramatically reduced. He may use his “dramatically reduced” rather than “eliminated” as the wiggle room here, but we do not believe “dramatically reduced” is accurate.
It is true that the new rate structure moves to about an 80% fixed component, but that would seem to imply that it is permanently fixed, when it is not.
There are three critical incentives to conserve.
The first is that reducing your usage will pay off for next year by potentially dramatically reducing your fixed rate. Mr. Dunning seems to completely dismiss this as a possibility by arguing that the 12 months factor negates the future incentive.
If that is the case, there are still two more immediate reasons to conserve.
One is that you still have a sizable variable rate component that will factor heavily into your water bill.
The second is that your sewer rates are heavily based on your water usage.
So, while it is true that the water rates are more heavily weighted toward fixed costs, there are still three strong reasons to conserve.
As Matt Williams notes, 12 months is not that long.
He notes, “If a consumer frees up a portion of the system capacity by conserving then 1) they are making the system more reliable and less susceptible to ‘drip outs’ and 2) they ‘creating’ additional capacity in the water system that can be used to satisfy new customers or increased demand from existing customers without having to incur the cost of expensive capital upgrades to the system.”
As Matt Williams points out, “The annual adjustment of the CBFR Fee rewards customers who create that kind of extra plant capacity. It also passes on a fair share of capital costs to those customers who increase the amount of water use load they are placing on the plant capacity.”
For lower-end users, even with rate increases, Matt Williams actually expects them initially to pay less than they are paying now. The burden then falls to the highest water users – where it should fall.
Mr. Dunning adds, “Worse yet, they plan to base those rates on water consumption in the summer months, when just about everyone’s water usage spikes considerably.”
He argues: “The only thing that has made Davis water rates even remotely tolerable so far is that we generally pay less for water in the fall and winter months. Now we’ll be paying the far higher summer usage rates year round. How much less water you use in the fall, winter and spring months will be irrelevant when it comes to your bill. It’s a shell game and we’re the victims.”
As Matt Williams explains, it is not actually a shell game.
“Why choose the summer period for this adjustment?” he writes. “If you have ever experienced an electrical brownout (or god forbid an electrical blackout), you know that there are times for public utilities where demand can exceed the system’s capacity to reliably deliver electricity or water. In designing the Davis water system the engineers have worked hard to create enough capacity to avoid a ‘drip out.’ “
They do this by looking at “the aggregate consumption history of all the 16,000 customers and see what the maximum usage is, and then design the plant to meet that aggregate usage plus some room for growth. They also add some capacity (almost double) to deal with the ‘peaking’ that happens between 4:00 AM and 6:00 AM when the vast majority of the city’s irrigation systems turn on to keep Davis green.”
As Mr. Williams notes, “If that method is the best way to design reliability into the system and avoid ‘drip outs’ for all the system customers, why isn’t it the best way to pass on to all the customers their fair share of the construction costs?”
The method that Mr. Williams developed with Frank Loge simply tries to divine those actual fixed costs and who contributes to those fixed costs. And what he is arguing is that those who use the most water during peak times – summer months, early in the morning – are the ones who contribute most to the capacity needs that are fixed regardless of use, the same way in which you would design your electrical system to handle the middle of a hot summer day rather than a cool spring evening.
However, the key to conservation is to change the way we use our water and this system will provide those incentives – over time.
I strongly disagree with Bob Dunning that I’m not going to cut back on my water usage next summer knowing that I will pay for that water usage the following year, year round. That’s a strong incentive to conserve, not a weak one.
—David M. Greenwald reporting
What are the new proposed summer months for basing the following year’s rates?
what does dunning believe the fixed rates – those rates not dependent on usage – should be based on?
Good question rusty. Since Davis consumption data comes in bi-monthly chunks, the six billing period choices are Jan/Feb, Mar/Apr, May/Jun, Jul/Aug, Sep/Oct and Dec/Nov. In the calendar year 2011 consumption data presented to the WAC by Bartle Wells and staff the total system consumption for those six periods was:
406,965ccf,
574,151 ccf,
960,838 ccf,
1,187,577 ccf,
906,695 ccf, and
513,712 ccf respectively.
The middle three of those values are 1) double the other three, and 2) sufficiently alike enough that the May through October period was chosen as representative of period where the water system experienced its peak load.
Matt, being we’ve already passed that 6 month summer period this year and that ratepayers have been under the understanding that future rates were going to be determined by their winter use is your plan, if implemented, going to be based on winter use to determine next year’s rates and summer use in subsequent years? I mean to me that sounds like the only fair way to start the program so ratepayers have a chance to conserve for next year’s rates.
Matt?
The rate analysis is a mess
Do we Barttle or Loge this one ?
My gutt check is the CC goes with the BWA traditional system supported by staff , but nothing surprises me anymore on the water project
Staff is all supporting L-W now.
rusty, I’ve been a bit out of pocket the past couple of days. Sorry for the delay in answering your second question. The reality of any “change” situation is that there is always going to be a segment of the affected population that will ask for further delay because they are not ready. So delaying in and of itself may not actually accomplish what you are looking to accomplish. So more often than not, you simply have to make the decision to take the plunge and do it.
With that said, there are at least two very compelling reasons to make the change now rather than 12 months from now. The first is that the City’s Water costs are still largely unaffected by the incremental surface water plant costs, so if any individual rate payer is in a position to have “missed” an incremental conservation opportunity, the cost of that “miss” is really quite low when compared to what that same “miss” will cost two years from now. So, for those few people in that situation, the City will be “cushioning” the blow they will receive for not getting on the conservation train earlier rather than later. The second is a legal liability issue. Because the research behind Loge-Williams shows so clearly how disproportionate the traditional rate structures are, the risk of a legal challenge (with all its attendant costs) is very high if you delay. Taking that legal risk simply doesn’t make sense.
I hope that helps further answer your question.
Matt, the new rate system can still implemented on time, the only difference will be that in its first year you can use the winter months conservation numbers instead of the summer’s. This way everyone will still be able to participate in the conservation. What you’re trying to push is rates based on past summer months which nobody knew would count and have already passed us by.
By the way, since rates will be based on summer useage get ready for the browning of Davis. The city is going to get ugly.