PROPOSAL TO ADJUST CURRENT WATER RATES

Goal: Address frequently expressed concerns of citizens

Simplicity

Understandability

Fairness

Liability Risk

FIVE PARTS OF THE PROPOSAL

Remove the Supply Charge “Look Back” Supply Charge Based on 12 months, not 6 Reduce Fixed Meter Fee by Additional 19% Use Two Tiers for Variable Use Fee Prop 218 Notice in Fall

Proposal affects all 3 Components of the Bill

BILL COMPONENTS

There are 3 Bill Components: 

- Distribution Charge

 

- Supply Charge

 

- Variable Use Fee

FIRST BILL COMPONENT

Supply (“Wet”) Charge

Must generate revenue to pay for fixed known infrastructure costs to:

• Build the water plant, • Drill wells, • Construct above ground storage tanks, and • Replace meters.

PROPOSAL - PART ONE

Remove the Supply Charge “Look

Back” Pay As You Go

• Bill each month for actual water use

• Pay for your own water use, not for those living at the property the previous May – Oct.

No money carry over

Familiar …

The Way It’s Always Been Done, Pay As You

Go

PROPOSAL - PART TWO

Supply Charge Based on 12 months,

not 6 Water will cost the same regardless of when you use it Advocated for by Measure P

supporters Advocated for by Davis Enterprise Provides Resilient/Sustainable

Revenue

EFFECT ON THE SUPPLY CHARGE

Proposed Supply Charge

Calculated each month as $0.22 X 12 per ccf used = $2.64 per ccf

Current Supply Charge

Calculated as $0.32 X 12 per ccf used = $3.84 per ccf, but only for the May to October months (with no charges for November through April), but paid for over 12 months, but not this year … the following year.

We believe this is an improvement

SECOND BILL COMPONENT

  Distribution (“Dry”) Charge

A fixed charge determined by meter size, for administrative costs such as billing, fire protection, and the potential to supply water.

For a 3/4”meter for a typical SFR it's $8.25/month

The bigger the meter, the greater the watercapacity, and the higher the charge.

 

PROPOSAL - PART THREE

Reduce Fixed Distribution Charge by

19%

Moves volume-related meter

replacement costs into Supply Charge Lessens fixed fee burden for all Helps Equalize the Cost Burden between low and and high volume users

THIRD BILL COMPONENT

Variable Use Fee

Covers volume driven costs like electricity for pumping, and chemicals for water treatment.

Currently it is calculated to be $0.86 per ccf … with no tiers

THIRD BILL COMPONENT

Variable Use Fee

Covers volume driven costs like electricity for pumping, and chemicals for water treatment.

Currently it is calculated to be $0.86 per ccf … with no tiers

Let’s talk about tiers

PROPOSAL - PART FOUR

Two Tiers in Variable Use Fee

First Tier and its Effect Current fee = $0.86 per ccf Proposed Tier 1 fee = $0.50 per ccf Tier 1 includes 20 ccf per living unit Reduces Cost of Low Volume Water Reduction of $0.36 per ccf produces a per month savings of $7.20 at 20 ccf

PROPOSAL - PART FOUR

Two Tiers in Variable Use Fee

Second Tier and its Effect Proposed Tier 2 Fee = $1.90 per ccf

for use greater than 20 ccf per living unit Incentive to Conserve Immediate Reward for Efficient Use Does not penalize large families 2.25 ccf per person (State standard)

PROPOSAL - PART FOUR

Two Tiers in Variable Use Fee

So Why Use Tiers?

Why Charge the amounts we propose?

Why Set the Cut-Off at 20-21 ccf?

The graphical examples that follow are for Single Family Residential accounts organized by increasing annual water use.

Each Group below represents 10%of the SFR accounts

Looking at the highest Water use Group

Four Way Picture

Progression from Bartle Wells (in yellow) to CBFR (in red) to this proposal (in green)

PROPOSAL - PART FOUR - SUMMARY

Two Tiers in Residential Variable Use

Fee

Equalizes Cost Burden

• Better Equity for Low Volume Users Incents Conservation Tier Break is high at 21 ccf Does not penalize large families PROTECT THE TIER BREAK at 21 ccf

ONE CHALLENGING ISSUE

Variable Use Fee Tier Cut-Offs

A key issue is how to fairly charge Commercial users, as well as users whose primary purpose is irrigation.

Irrigation-Only customers should pay their fair share for the water they use, and yet if their water is priced too high they might leave the water system.

So we'd like to carefully and proportionally set prices in order to keep an incentive for them to stay in the surface water system and continue to pay a share of the cost.

THE CONSUMER’S PERSPECTIVE

CALCULATING BILLS

Proposed Supply Charge

Calculated each month as $0.22 X 12 per ccf used = $2.64 per ccf

Current Supply Charge

Calculated as $0.32 X 12 per ccf used = $3.84 per ccf, but only for the May to October months (with no charges for November through April), but paid for over 12 months, but not this year…the following year. It is a pain in the but.

CALCULATING BILLS

Proposed Supply Charge

Calculated each month as $0.22 X 12 per ccf used = $2.64 per ccf

Current Supply Charge

Calculated as $0.32 X 12 per ccf used = $3.84 per ccf, but only for the May to October months (with no charges for November through April), but paid for over 12 months, but not this year…the following year. It is a pain in the but.

Which one would you choose?

CALCULATING BILLS

There are 3 Bill Components: 

- Distribution Charge

 

- Supply Charge

 

- Variable Use Fee

CALCULATING BILLS

Adding the Components Together:

Calculation of monthly Bill without tiers:

Distribution Charge by meter size, plus $2.64 per ccf Supply Charge, plus $0.86 per ccf Variable Use Fee = Total Water Bill

  Calculation of monthly Bill with proposed tiers:

Distribution Charge by meter size, plus $2.64 per ccf Supply Charge, plus $0.50 per ccf <21 plus $1.90 per ccf >20 = Total Water Bill

 

PROPOSAL - PART FIVE

Prop 218 Notice in Fall Democratic Mitigates any possible legal risk Inexpensive Strong Message to Lenders Plenty of Lead Time prior to 1/1/2015

PROPOSAL REVIEW

Remove the “Look Back” Supply Charge Based on 12 months, not 6 Reduce Fixed Meter Fee by Additional 19% Use Two Tiers for Variable Use Fee Prop 218 Notice in Fall

Taken all together all three parts of the bill have been modified.

We believe we have addressed the frequently expressed concerns of citizens.

WHY DO ANYTHING?

We believe this is a better rate

structure

• It is more responsive to consumers

• It is more equitable

• It is simpler and easier to understand

• It is fiscally resilient and sustainable

• It is the result of democracy in action

• It reduces the community’s fiscal risk

WHY DO IT NOW?

Addresses Citizen Concerns

Measure P Supporters’ “Fairness”

definition

Liability Risk identified in Ballot Statement