Friday, March 27, 2015

Bob Dunning: Mathematics thicker than water


From page A2 | February 13, 2013 |

Although the proponents of our innovative, only-in-Davis water rate structure aren’t eager for this information to get into the public consciousness, the plain fact of the matter is that once the consumption-based fixed rate system is fully functional in 2018, every ccf of water you use in the summer will cost you $7.80 annually, while the same ccf you use in the winter will cost $1.32.

You do the math and that comes up to nearly six times as much for summer water as winter water.

Add to this the fact that in the city’s Endless Summer definition, this period of so-called “peak use” stretches all the way from May 1 to Oct. 31.

In other words, if you use a ccf of water on April 30, the effect on your annual bill will be $1.32. But if you use that same ccf of water on May 1 — just one day later — it will cost you $7.80 on your annual bill.

Proposition 218, bolstered by a large body of case law, insists that charges for water be “proportional” to the actual cost of delivering water to the residence in question.

Says 218: “The amount of a fee or charge imposed upon any parcel or person as an incident of property ownership shall not exceed the proportional cost of the service attributable to the parcel.”

Prop. 218 further emphasizes the point when it says “Revenues derived from the fee or charge shall not exceed the funds required to provide the property related service.”

Now here is where the concept of “peak use” comes into play. According to one city official in charge of knowing these things, peak use occurs between 4 a.m. and 8 a.m. during the months of July and August. The city therefore has to plan its facilities — capacity, storage, etc. — to account for peak use. Fair enough.

But there’s absolutely no way on God’s green Earth, even taking peak use into full consideration, that the city can demonstrate it costs six times more to deliver water in summer than in winter, especially when the city meteorologist defines summer as beginning on May 1 and not ending until the last of our trick-or-treaters are tucked safely into their beds on Halloween night.

When I presented these figures to the above-referenced city of Davis expert, the reply was a seemingly incredulous “Where did you get $7.80 per ccf?” In other words, this individual apparently hadn’t done the math.

In 2018 under the CBFR, your monthly bill will reflect a charge of $1.32 per ccf no matter in which month you use the ccf, be it summer or winter.

But, if you use that ccf in summer (May 1 through Oct. 31), in addition to the $1.32, you also will pay a “supply charge” of 54 cents in each and every month of the next year. Last time I checked, when you multiply 12 times 54 you get $6.48. Add that to the $1.32 monthly “variable” charge and you get $7.80.

Just for the record, the average Davis single-family home uses approximately 15 ccf per month, more than that in summer, less in winter, with obvious variations from home to home.

So let’s say you use 20 ccf in summer and 10 ccf in winter to achieve that 15 ccf average.

Those 20 ccf in summer total 120 ccf for the entire six months, with a “variable” charge of $1.32 per ccf for a total of $158.40 on your annual bill. But wait, we’re not done. Not by a long shot.

You also will be charged 54 cents for each of those 120 ccf in each and every month of the new year. That’s an additional $64.80 per month “supply” charge, times 12 months, for a total of $777.60. Add that to your $158.40 “variable” charge and your annual total becomes $936 for 120 ccf used in summer. That works out once again to $7.80 per ccf.

A comparable figure had you used those 120 ccf in winter would be just $158.40.

To be sure, “peak” demand taxes the system to a higher degree, but the cost never reaches six times as much as non-peak use. Not even close.

My city “expert,” while not disputing the accuracy of my figures, nonetheless protested that I was confusing “variable” charges with “supply” charges and said I was making it look as if the city was charging people twice for the same ccf of water.

No, the city is actually charging people 13 times for the same ccf of water. You read that right. Once at $1.32 and 12 more times at 54 cents each. Worse yet, if you had a bad summer, you’re stuck with that rate for an entire year, even if you stop using water altogether.

You can call it a “variable” charge or a “supply” charge or any other label you wish to attach, but in the end, all of those charges are based strictly and solely on the number of ccf you used the previous summer. Nothing else.

If it looks like a ccf charge and walks like a ccf charge and talks like a ccf charge, well, by golly, it is a ccf charge.

Now, Prop. 218’s mandate of “proportionality” doesn’t require that the price charged for a ccf of water compared to the cost of delivering that ccf of water be exact to the penny. In a California case (City of Dublin v. County of Alameda), the court ruled “The record need only demonstrate a reasonable relationship between the fees to be charged and the estimated cost of the service or program.”

The relevant phrase here is “reasonable relationship.” Charging six times as much in summer as in winter is by no stretch of the imagination a reasonable relationship.

According to an analysis of Prop. 218 by the Legislative Analyst’s Office, the burden of proof when it comes to rate compliance with proportionality falls squarely on the city. Wrote the LAO: “Now local governments must prove that any disputed fee or assessment charge is legal.”

If the city can prove to a court’s satisfaction that it truly costs six times as much to deliver water from May through October as it does to deliver water from November through April, it will be free and clear of any legal problems.

But if it can’t, the city will most definitely be in violation of Prop. 218’s proportionality requirement.

— Reach Bob Dunning a [email protected]





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