Thursday, April 17, 2014
YOLO COUNTY NEWS
99 CENTS

How the city arrived at the proposed rates

By
From page A1 | February 01, 2013 | Leave Comment

* Editor’s note: This is the last in a series of stories examining the proposed Woodland-Davis joint surface water project, including project specifics, the city of Davis’ water utility in general and arguments for and against Measure I in the March 5 mail-only election.

Once the Water Advisory Committee had picked the Woodland-Davis surface water project in October as the preferred option to deliver surface water to Davis, the group then took aim at the water rate structure that the city would need to pay for it.

City staff and the city’s hired rate consultant, Bartle Wells Associates, presented to the WAC several industry-standard rate models to pick from.

Each closely resembled the way the city currently bills its residents for water: with a fixed rate based on meter size and a variable rate based on consumption. These types of rate models were, in their opinion, industry-standard and compliant with Proposition 218. That voter-approved measure sets the state law for how a public agency can extend, impose or increase utility fees, including for water.

One rate model that Bartle Wells suggested was a three-tiered inclining block rate structure that charges customers more for water when they reach a certain level of usage, in addition to the base fixed fee determined by meter size.

Bartle Wells originally recommended that the first tier cover 1 to 10 ccf of usage, the second to cover 11-29 ccf and the third 30 and over, with the cost per hundred cubic feet (ccf) rising as use climbed up the ladder.

The second option again included a base fixed fee, but then a uniform-block rate for the variable portion of the rate structure. Under that structure, regardless of how much water a user consumes, the cost per ccf stays the same.

But two water committee members — Frank Loge, a UC Davis professor of civil and environmental engineering, and Matt Williams, an El Macero resident — found the standard models flawed.

“While meter size-based fixed rates seem proportional and fair at first sight, they are a simplistic, indirect and inexact measure of proportionality,” the pair wrote in a handout for a presentation they gave to the WAC in September.

“Meter size-based rate schemes are … based on the potential demand, rather than the actual demand a consumer places on the (water) system.”

The two determined that any household of the same meter size pays the exact same fixed fee regardless of how much water they use, which is disproportionate considering the different loads various households put on the city’s water infrastructure.

“Thrifty and extravagant water users pay the same fixed fee, but derive entirely different benefits from the system they fund with their fixed fees,” the committee members wrote. “The thrifty user’s fixed fees (actually) cover some of the fixed costs the wasteful user imparts on the system, in effect subsidizing the water waster.”

Loge explained it by saying that “roughly half of the people in Davis are subsidizing the water use of the other half.”

A new fixed rate

Loge and Williams developed a rate structure that broke down a customer’s water bill even further to appropriately assign fixed costs based on consumption. Their model, like the industry standard, charged a base fee determined by meter size and a variable fee based on consumption. But unlike traditional rate models, the structure charged a third fee based on historical or previous usage.

To calculate the third consumption-based fixed rate, the city would look at how much money it needed to receive from its customers to pay off its own fixed water costs and then divide that number, proportionally, among all water customers based on how much water they used the previous year.

So if a water customer made up 1 percent of the city’s overall water usage, it would pay 1 percent of the city’s fixed revenue requirement.

The rate model also encouraged conservation, as ratepayers would know that they could potentially reduce the cost of their water bill next year by using less.

It was, as many in the city and on the water committee came to agree, the fairest way to bill ratepayers for water.

Though city staff were hesitant to consider the untested rate structure, they conferred with attorneys and with Bartle Wells to see if the model could work and also if it would pass muster under Prop. 218 proportionality. (The rates are being challenged by a class action lawsuit filed Thursday in Yolo Superior Court.)

The city describes the consumption-based fixed rate model this way: ”The supply-charge fee is calculated by using the projected annual revenue requirement related to water supply and treatment and dividing it by the total projected six-month peak period (May through October) water use of the water utility to produce a per-ccf rate.

“The individual fee per customer is then calculated by taking the per-ccf rate and multiplying it by the individual customer’s prior year’s six-month peak period water use. Each year, this CBFR amount is recalculated based on an individual’s actual water use during the prior six-month May-through-October peak consumption period. So for Jan. 1, 2015, the May-October of 2014 total volume will be used. The supply charge will comprise approximately 67 percent of an average monthly water bill.”

While perhaps complex, the city felt comfortable enough that it could print this rate structure on Prop. 218 notices that are sent to property owners to inform them of pending rate increases.

The notices must include the proposed rate structure and an equation for customers to calculate their future water bills. And with the revised Loge-Williams model, the city could accomplish this.

So, with the city’s approval, the CBFR and two Bartle Wells industry-standard rate structures were all viable options for the WAC to pick from.

Six-hour debate

In November, the committee held two three-hour meetings to debate which rate structure it should recommend to the City Council.

Some felt they should just continue on with industry standard, that the CBFR model was too complex to explain or would be too vulnerable to legal challenge.

But then, the committee was reminded, this is Davis.

“Nothing about this project we’ve done is innovative,” David Purkey, a WAC alternate, said at the meeting. “(But) this is Davis. This is something for us to do, something innovative, and if someone is going to innovate this type of reform … I think that we should be the ones to do it.”

After six hours of debate, the committee recommended CBFR to the council on an 8-2 vote.

It appeared the bold move would be short-lived, however, as the council rejected the recommendation, instead asking the WAC to pick one of the standard structures for simplicity’s sake.

But the WAC stood firm and again voted to recommend the CBFR model.

The council eventually found a compromise. At its next meeting, the council determined that if it was going to go with CBFR, it couldn’t implement it immediately without warning customers that their previous usage would affect their current water bills.

Instead, the council elected to approve an inclining-block rate tiered structure — with the first tier set at 18 ccf per month to accommodate larger families — for the first two years of the rate schedule, and then implement the CBFR model with a uniform block variable rate starting in 2015.

This rate schedule would allow the city ample opportunity to educate the public on how their rates would be calculated in the future, based on historical consumption.

On Jan. 15, the council unanimously approved the rate structure.

Prop. 218 notices

The city mailed Prop. 218 notices this week that explain how to calculate future water rates based on the rate models the WAC and City Council selected. Property owners have until March 19 to protest the five-year rate schedule the council signed off on in January.

The council will conduct a public hearing that night at which it will adopt the rates unless more than half of the roughly 16,500 property owners in Davis lodge protests.

Under the hybrid-rate model, the average consumer using about 15 ccf of water per month would pay $35.78 monthly starting May 1.

By Jan. 1, 2015, a single-family home user consuming 15 ccf per month, with a peak six-month usage of 120 ccf, would pay $61.51 per month.

By Jan. 1, 2018, a single-family home user consuming 15 ccf per month, with the same peak usage of 120 ccf, would pay $98.27 per month.

 — Reach Tom Sakash at tsakash@davisenterprise.net or 530-747-8057. Follow him on Twitter at @TomSakash

Tom Sakash

Tom Sakash covers the city beat for The Davis Enterprise. Reach him at tsakash@davisenterprise.net, (530) 747-8057 or @TomSakash.
LEAVE A COMMENT

Discussion | No comments

The Davis Enterprise does not necessarily condone the comments here, nor does it review every post. Read our full policy

  • Recent Posts

  • Enter your email address to subscribe to this newspaper and receive notifications of new articles by email.

  • .

    News

    Benefit set for local bike legend

    By Adrian Glass-Moore | From Page: A1

     
     
    For the record

    By Dave Ryan | From Page: A2

    Three killed in attack on Ukrainian base

    By The Associated Press | From Page: A2 | Gallery

     
    California residents divided on drought solution

    By San Francisco Chronicle | From Page: A2

     
    Scholar will discuss human trafficking in Friday talk

    By Enterprise staff | From Page: A3

     
    Downtown post office set to reopen

    By Thomas Oide | From Page: B3

    Run or walk to prevent child abuse in Yolo County

    By Enterprise staff | From Page: B3 | Gallery

     
    Nominations sought for charity paint giveaway

    By Enterprise staff | From Page: B3

    Learn more about Google Glass at talk

    By Enterprise staff | From Page: A4

     
    Per Capita Davis: Now, for some good news

    By John Mott-Smith | From Page: A4

    Birch Lane hosts 50th anniversary party

    By Enterprise staff | From Page: A4

     
    Hannah Stein reads poetry at gallery

    By Enterprise staff | From Page: A4

    Davis Food Co-op to offer free bags on Earth Day

    By Enterprise staff | From Page: A4

     
    Get in the picture with school board candidate

    By Special to The Enterprise | From Page: A4

    KDVS hosts on-air fundraiser April 21-27

    By Enterprise staff | From Page: A4

     
    Tickets on sale for Pence Garden Tour

    By Enterprise staff | From Page: A4

    Fundraiser planned for Allen’s campaign

    By Enterprise staff | From Page: A4

     
    Food Co-op board plans open house

    By Enterprise staff | From Page: A4

    Davis Downtown hosts candidate forum

    By Dave Ryan | From Page: A4

     
    Barbecue celebrates winter shelter program

    By Special to The Enterprise | From Page: A5

    Davis Soroptimists celebrate 60 years

    By Special to The Enterprise | From Page: A8

     
    Sign of things to come

    By Fred Gladdis | From Page: A8

    .

    Forum

    Fancy meeting you here …

    By Special to The Enterprise | From Page: B5

     
    Have they really learned?

    By Letters to the Editor | From Page: A6

    A great community effort

    By Letters to the Editor | From Page: A6

     
    Public Health Heroes honored

    By Letters to the Editor | From Page: A6

    Tom Meyer cartoon

    By Debbie Davis | From Page: A6

     
    Don’t miss a Trokanski dance

    By Letters to the Editor | From Page: A6

    Frank Bruni: The oldest hatred, forever young

    By New York Times News Service | From Page: A6

     
    Expert: Free parking is a myth

    By Special to The Enterprise | From Page: A6

    .

    Sports

    Foster steps down as Lady Blue Devil basketball coach

    By Bruce Gallaudet | From Page: B1 | Gallery

     
    River Cats’ streak reaches six wins

    By Enterprise staff | From Page: B1

    Landry evolves into UCD women’s lacrosse leader

    By Bruce Gallaudet | From Page: B1 | Gallery

     
    Huge inning propels Pleasant Grove past DHS

    By Enterprise staff | From Page: B1

    Giants edge Dodgers

    By The Associated Press | From Page: B1 | Gallery

     
    Youth roundup: Martinez, Chan come up big at gymnastics regional

    By Enterprise staff | From Page: B2 | Gallery

    Kings drop season finale to Suns

    By The Associated Press | From Page: B2

     
    Angels get past A’s in extras

    By The Associated Press | From Page: B8 | Gallery

    .

    Features

    .

    Arts

    Wineaux: Good deals off the beaten path

    By Susan Leonardi | From Page: A7

     
    Rockabilly phenom to play at The Palms

    By Enterprise staff | From Page: A7

    HellaCappella showcases a cappella singing

    By Enterprise staff | From Page: A7

     
    ‘One’ singular sensation to open at DMTC

    By Enterprise staff | From Page: A7

    25th annual state clay competition exhibit at The Artery

    By Enterprise staff | From Page: A7

     
    .

    Business

    .

    Obituaries

    Tapan Munroe

    By Special to The Enterprise | From Page: A4

     
    .

    Comics

    Comics: Thursday, April 17, 2014

    By Creator | From Page: B6