When ‘control’ doesn’t mean control

By From page A6 | February 14, 2013

Brett Lee’s commentary supporting Measure I contains a misleading example regarding how the project cost will be paid. His calculation implies that the “supply charge” portion of the consumption-based fixed rate would be around $270 per year per ratepayer. But an equitable distribution of project cost isn’t how it will be paid for, and the inequitable cost distribution is one of the troubling parts of the CBFR.

The supply charge is intended to reflect the burden placed on the infrastructure by a user. Yet the supply charge is calculated using six months of “summer” water usage, ignoring six months of lower usage. Isn’t 12 months more reflective of a user’s annual burden on the system?

Moreover, the supply charge will be based on “summer” usage even though “groundwater will still be needed” then. Why is 67 percent of a user’s water bill — the charge directed toward paying for the new system — going to be based on usage during the period when the user will receive groundwater along with (or instead of) water from the new system?

Indeed, the city will continue drawing water from its wells, even though we’re told they are expensive to drill, potentially damaging to the aquifer, and with declining water quality and quantity.

Lastly, the city must collect a fixed amount of money annually through the supply charge to pay for the infrastructure, and if users conserve water, how will the city generate the amount needed to repay the loan? The answer is in the city engineer’s rate presentation (City Council, Dec. 11, 2012). The $/ccf multiplier will be increased as follows: (projected annual revenue requirement) /(projected six-month summer period peak water use of all consumers) = $/unit of water. Thus, as water usage declines, the multiplier needed to secure the required revenue via the supply charge will increase.

The city apparently adopted the CBFR formula because it guarantees that the needed dollars will be generated regardless of consumption and so it is attractive to lenders. With the CBFR, consumers won’t have “increased control over their utility bills” because an individual consumer can’t control the “peak water use of all consumers.”

Leigh Segel

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