Council to consider untested water rate structure

By Tom Sakash
From page A1 | December 11, 2012 | Leave Comment

Nearly one month after the Davis Water Advisory Committee voted 8-2 to advise the City Council to install an untested and innovative rate structure to bill ratepayers for water, the council will finally have the opportunity to weigh in.

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What: Davis City Council

When: 6:30 p.m. Tuesday

Where: Community Chambers, Davis City Hall

Watch it: Live on City Government Channel 16 on Comcast and on AT&T U-Verse Channel 99

Facing construction costs of a surface water project that likely will double or triple the average Davis water bill over the next five years, the water committee had been tasked by the council to pick the fairest way to bill residents for their share of the city’s water utility.

The Woodland-Davis Clean Water Agency project is estimated to cost Davis $113 million. The council has decided to put the entire project up to an all-mail public vote, called Measure I.

Residents will receive their ballots, in addition to arguments and rebuttals for and against the project, from the Yolo County Elections Office the week of Feb. 4. Ballots are due back by Tuesday, March 5.

The project will pump water from the Sacramento River, treat it and pipe it to Davis and Woodland. Its purpose is to supplement both cities’ dependence on deteriorating ground water supplies.

Rather than picking a tiered inclining block rate structure, the most commonly used system in the state to charge customers for water, the committee supported a new rate structure devised by committee members Frank Loge and Matt Williams.

Committee members, who debated several types of rate structures for three hours at its Nov. 15 meeting, eventually agreed that their colleagues’ model was the fairest way to bill customers.

The Loge-Williams system works by tracking how many gallons of water a customer uses in the previous year, comparing that amount to how much the rest of the residents in the city used and then charging the customer for their percentage-use of overall water consumption.

In addition to the fixed-rate costs, residents would be charged a variable rate through an inclining tiered structure to pay for the actual water they use.

There also would be another base fixed fee that the city’s rate consultant, Bartle Wells Associates, calls a “readiness-to-serve” fee for residents to have access to the system, regardless of how much water they consume.

As Loge and Williams have said, under the old structure, two water users with the same meter size could use two entirely different amounts of water, but pay the exact same amount on their water bills.

There seems to be agreement between the water committee and city staff that the Loge-Williams method is the fairest way to bill ratepayers for water, but city staff members have voiced concerns over the risks of implementing it in Davis.

The City Council can increase water rates to ratepayers only through the state’s Proposition 218 process.

That process stipulates that the council must send out notices of pending rate increases, including an explanation of the rate structure and the corresponding rates, to all property owners in the city.

Staff worries that if the language is too difficult to understand, it may hurt the chances of approval by the public, which would jeopardize the city’s participation in the surface water project.

The other concern the city has is that an untested system could discourage creditors from using their most optimal financing terms for loans to pay for the project, which could mean potentially higher interest rates to pay off the debt service to the city and subsequently higher water rates.

Regardless of what the council decides Tuesday, the WAC is expected to finalize a rate recommendation to the council Thursday. The City Council then will send out Prop. 218 notices on Jan. 15.

If more than half of the property owners protest, the rate increase is suspended.

Last year, about 4,500 property owners out of 15,800 in the city protested a rate hike that the City Council approved in September. A citizen-driven referendum was then circulated, collecting enough signatures from residents to overturn the rates the council passed. The council repealed the rates and then decided to form the Water Advisory Committee to reassess the city’s position on a surface water project.

— Reach Tom Sakash at tsakash@davisenterprise.net or 530-747-8057. Follow him on Twitter at @TomSakash. Follow all Davis water news using #daviswater