What is a fair water rate? What will pay the bills? Is the city going to get sued anyway?
Meeting for the first time since Measure P passed at the polls Tuesday with a narrow majority, the members of the city’s Utility Rate Advisory Committee came to few conclusions Thursday night, but had many questions.
Measure P was approved by 51.2 percent of voters Tuesday, with 264 votes separating the yes and no crowd. With 7,200 additional ballots to be counted countywide, if the result holds, it will repeal water rates set in May 2013 and reinstate those set in 2010.
According to committee consultant Douglas Dove of Bartle Wells Associates, if that happens, the city will lose $215,000 in revenue each month and about $2.5 million each year.
Herb Niederberger, the city’s general manager of utilities, said representatives of the Woodland-Davis Clean Water Agency told him the city would be able to get low-interest loans from the state if new water rates are in place through a Proposition 218 process by Oct. 1.
Niederberger said that meant the committee would have to recommend a rate structure to the City Council by July 1. The council is due to hear an update on the committee’s actions on June 10 and is expected to have a more substantial discussion about the rates on June 24.
With the time crunch, questions surrounding Measure P, legal exposure and list of different water rates presented and their various iterations, the committee has an unenviable task ahead of it.
At one point, committee alternate Gerry Braun asked Dove if the rate structures he presented were “bulletproof” against potential lawsuits.
“We’re in Davis; we think it will be subject to a lawsuit,” Dove said. “We’re confident in what we presented.”
Dove’s presentation showcased four different water rate structures based on four different kinds of loans the city might get for the surface water project: market rate at conservative interest rates, market rate at current interest rates and others based on lower interest rates.
Dove assumed current interest rates at about 6 percent, or $10.5 million per year in cost. State low-interest loans would mean a lower payback, estimated at $7.7 million per year.
A couple of structures have three tiers for different consumption rates. The higher the water use, the higher the tier and the more expensive each gallon becomes. One option has a single uniform tier by class: commercial or single-family home, for example. Another option has a seasonal tier system, with one rate for the winter months and another for the summer, with the summer rate more expensive than the winter.
Matt Williams and Donna Lemongello presented a consumption-based rate that does away with a six-month summer water use measurement that would determine the cost of water for the following year. The new tweak has the consumption-based rate change the cost to the customer month by month based on each month’s use of water.
Yet committee members were wary of how each rate would appear to the public.
“You’re not going to please everyone in the community,” committee member Frank Loge said. Loge is a UC Davis professor of water use and efficiency and helped Williams create the consumption-based rate repealed by Measure P.
Committee member Greg Clumpner, director of a private consulting firm, NBS — Government Financing Group, asked what exactly Measure P did. Niederberger said the committee would need an attorney to get an official, exact interpretation.
Committee member Richard McCann, who works with M. Cubed, a local energy, water and environmental economics and policy consulting firm, convinced the committee that whatever the legal interpretation, the City Council already has determined the political implications, that the old consumption-based rate was too unpopular.
“I think their political wind detection is better than ours,” he said.
Committee member Johannes Troost, a consultant with the state Department of Education, asked what fairness meant, and after the committee agreed it could mean different things to different people, suggested the committee submit a rubric of different water rate structures to the City Council.
Each structure would reflect how many committee votes it got, and a “minority report” of structures that didn’t receive majority votes would be included.
“That way we don’t have to weigh in on ‘this way is the best way,’ ” he said. Troost got general agreement on that principle, but a warning from Niederberger.
“We could come up with the most fair rate in the world and everybody could agree on it, but if it doesn’t pay the bills we’re screwed,” he said.
The committee meets again at 6:30 p.m. June 12 at a placed to be determined.
— Reach Dave Ryan at [email protected] or 530-747-8057. Follow him on Twitter at @davewritesnews