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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
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