Friday, January 30, 2015
YOLO COUNTY NEWS
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Water committee members may have found answer to fair water rate question

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From page A1 | September 09, 2012 |

Two Water Advisory Committee members have developed a water rate structure that could have Davis residents paying the fairest water bills in the state, regardless of which multimillion-dollar surface water project the city chooses to bring a new water source to Davis.

Frank Loge, a UC Davis professor of civil and environmental engineering, and Matt Williams, an El Macero resident, were appointed to the water committee last year to determine, among other things for the city and its water issues, the fairest way to bill residents for water.

Rather than picking from a list of rate structures that cities across the state already employ, the pair have come up with a proportional fixed-fee structure based on water consumption history that could balance water bills in Davis.

The potential rub is that it’s a system that has never been tried before in California.

Like many public agencies in the state, Davis uses a tiered water rate structure where customers pay a fixed rate based on the size of their water meter and then a variable rate based on how much water they use.

Williams and Loge say this type of system does not treat all water customers equally.

“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 will give next week at a UCD conference.

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

Basically, any household of the same meter size — which determines the maximum capacity of water a house can access — pays the exact same fixed rate regardless of how much water they use.

“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 puts it in another way.

“Roughly half of the people in Davis are subsidizing the water use of the other half,” he said Thursday. “That’s a specific example of how the current rate structure is not equitable.”

Proportional rates
Under the two committee members’ structure, however, the fixed fees on water bills would be proportional to the amount of water each customer uses so that water bills reflect the load each individual user puts on the water system.
And they would set the fixed fees by basing the rates off of each customer’s prior year’s usage of the whole water system.

The city then would determine what percentage of the its water system the customer had used over the past year and set a proportional fixed rate according to that usage that would be assessed for the next 12 months.

Aside from encouraging residents to conserve more water so that their fixed fees would be set at a lower rate the next year, this structure would allow each water customer to pay for only their share of the total fixed costs that the city incurs for managing the entire water system.
“What we’ve proposed is much more fair for the city of Davis,” Loge said.

Loge and Williams would have the variable rate remain a tier structure where residents pay for water at a set rate until they’ve used enough to where they’re required to pay more.

According to Williams, this structure would double fixed rates on utility bills, while cutting variable rates in half.
It also would guarantee that the city could pay off 100 percent of its fixed costs.
“(This means) no more budget deficits in the water account, which means more stable finances for both consumers and the city,” Williams explained in an email.
Presentation set
Loge and Williams have discussed the proposed rate structure with the rest of the Water Advisory Committee and the committee has asked them to come back in several weeks to give a full presentation so they can compare the new structure to the two other types they will have to choose from.

However, Herb Niederberger, the city’s new general manager of utilities, development and operations, has concerns that Williams’ and Loge’s proposal might be difficult to run in Davis.

“Rates based upon historical consumption patterns are difficult to employ in communities with a high number of rentals and transient populations,” Niederberger said in an email. “Most college communities meet this description.

“It is much easier and more industry-acceptable to employ a rate structure that features a fixed charge based upon service or meter size, and variable charge based upon consumption, with inclining blocks to encourage conservation.”

That being said, City Manager Steve Pinkerton recognizes that the structure Williams and Loge have developed has potential and says city leaders will keep an open mind about it.

However, Pinkerton also believes that implementing the system in the short time frame the city has to put a surface water project and a corresponding rate structure to a vote could be difficult.

“We just don’t want to make a $10 million mistake,” he said Friday.

Loge and Williams understand there will be many questions that come along with this new structure, but should the city decide to pursue it, they believe the benefits could be great.

Three possibilities

According to Pinkerton, the city has asked Bartle Wells Associates — the consultant it hired to help it make a decision on rates — to look at the structure Williams and Loge have come up with and compare it to the two other rate structures the Water Advisory Committee has to consider.

Loge sees the request as a good sign.

“I kind of see it as, if the city is willing to spend money on it, they must be interested,” he said.

The two other types of structures Bartle Wells Associates likely will propose include a basic tiered structure, where the unit price of water changes with each preset block of usage, and a water budget structure, a type of inclining-block rate with individualized allocations of water based on specific customer characteristics like the number of household members or landscaped land area.

— Reach Tom Sakash at [email protected] or 530-747-8057 or follow him on Twitter @TomSakash

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Tom Sakash

Tom Sakash covers the city beat for The Davis Enterprise. Reach him at [email protected], (530) 747-8057 or @TomSakash.
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