Rate study OK’d despite concerns about equity, transparency

Water rates public hearing is Dec. 10

Rate study OK’d  despite concerns about  equity, transparencyBy BRIAN COSNER

News Review Staff Writer

The Indian Wells Valley Water District will hold a Proposition 218 hearing in December for its increased water rates, approved 3-1 by the IWVWD Board of Directors during its Oct. 9 meeting.

The rate increase is the first of five three-percent rate increases proposed to take place over the next four years. The increase will help fund the district’s planned $14 million in capital improvements, including automated metering, water storage and improved well infrastructure, over the next two years.

Director Peter Brown said the new rates would be the “least impactful to all of our ratepayers and it represents a cost-of-living increase.”

Matthew Freiberg of Stantec was present on Tuesday to give an overview of his firm’s cost-of-service study which outlined the four-tiered rate structure.

Fixed monthly charges will continue to cover roughly two thirds of the district’s rate revenue, but with a slight decrease from $41.41 per month for users of typical 3/4-inch meters to $38.08. Zone charges will increase by approximately 50 percent to cover increased electricity and labor costs as well as capital expenses.

While the projected rate revenue is expected to increase by 3 percent in total, that increase isn’t seen uniformly across the board.

Tier-1 (allocation of up to 9 hundred cubic feet per month) rates will increase from $.56 per HCF to $.74 (32.1 percent), Tier-2 (9-15 HCF) rates will increase from $.88 per HCF to $1.24, Tier-3 (15-45 HCF) rates will remain the same at $2.39 per HCF and Tier-4 (more than 45 HCF) rates will increase from $4.65 per HCF to $4.92. These rates include a 7-cent charge per HCF for Groundwater Sustainability Agency costs.

Water for private fire costs will also increase by roughly 42 percent from $111,000 in annual revenue to a proposed $157,810, but the bulk of the increase will be shared by some 21 large-meter customers while other customers see a reduction.

Director Chuck Griffin said he is concerned about the allocation of costs for the private fire service.

“That’s going to affect the schools and stuff like that. We’re justifying that just by saying, ‘We have that ready to serve?’” he said. “That’s 21 customers that are going to pay the extra $40,000 in projected revenues.”

Freiberg said the rates were based on an algorithm that took into account demand factors and meter size and was applied uniformly throughout the study.

Griffin also took issue with the high Tier 4 water costs, even though the increase was a lower percentage than for some of the other tiers. “Those people in Tier 4 are the college and the hospital. They don’t chose to be in Tier 4,” he said. “They’re using a lot of water but they have to because the demand is there.”

Freiberg continued to defend his figures, adding that the increased Tier-4 costs were justified by paying for the district’s $560,000 in conservation programs. “Once we start massaging those arbitrarily, then we start running into jeopardy of Prop 218.”

“This is what our expert says is fair and equitable based on [American Water Works Association] standards,” said Brown. “You can’t stretch it because you don’t like it. As long as he can say we’re compliant and our attorney can say we’re compliant, then we’re compliant. But if we insert our own belief system and we start adjusting these numbers, we’re no longer compliant because there’s no logic and facts driving it.”

But Griffin pointed out that rate increases ranging from 5 to 30 percent depending on the tier were not fair and equitable.

During public comment, Stan Rajtora agreed with Griffin that Tier-4 rates are too high, but also that the fixed charge is too high and doesn’t encourage conservation.

“It’s difficult with an internet search to find a district like us with a fixed fee greater than the middle 20s,” said Rajtora. “It is also difficult, or impossible, to find a district with a Tier-1 unit rate under $1.80.”

He pointed out that while the district is stressing compliance with Prop 218, the previous fixed charge of $26.24 was compliant in 2011.

“We now have a healthy reserve and can use reasonable water sales estimates,” said Rajtora. “Good management could permit equitable rates without fear of failure.”

He also said that high Tier-4 rates were placing the $560,000 toward conservation on too few customers while “forcing” the Tier-1 and -2 rates down.

Member of the public Mike Neel said that the most equitable way to charge for water would be to do away with fees and charge a uniform rate for water use.

“It’s not supposed to be about conservation,” said Neel. “It’s supposed to be about the cost of delivering water.”

“I’m hearing that the fixed rates are too high,” said David Saint-Amand during public comment. “What I didn’t hear was how low they should go.”

He added that the decrease in the fixed charge seemed “pretty reasonable,” and he congratulated the district on raising revenue to fund capital improvements and debt service rather than pay more in interest.

Brown also reminded the public that the proposed 3-percent increases meant “up to 3 percent” and that the district could make the increases smaller if revenue needs are being met. “That’s how I explain it to people and they always say, ‘Oh, I get it. I want to make sure my fixed costs are covered no matter what,’” he said.

But Griffin said he still wasn’t satisfied with the rate study and suggested that the consultant was just asked to come up with a structure that would amount to the full 3-percent increase.

“That’s not the way it works,” said Brown. But Griffin stood by his opinion.

“That’s totally bogus, that’s crap,” said Brown. “His job is to look at our numbers, we don’t tell him what numbers to give us. We have not told this man to do anything. He didn’t invent something because we said, ‘Do this.’ So when you say that, you’re wrong, and I kind of resent it.

“That supposes that this is all just a dog-and-pony show …. It is not a dog-and-pony show. They do rate studies all the time, and they’re accurate. If they weren’t accurate they wouldn’t be in business.”

Before the cost-of-service study discussion, Board President Ron Kicinski commented that he didn’t appreciate some comments from the community that staff and the board were not being transparent.

“We have been handed awards for being transparent,” said Kicisnki. “Everything we do is transparent. Everything has to go to staff and legal before it comes to us for discussion. That [criticism] needs to stop because we are very transparent.”

Rajtora said in a letter to the board that “the public does not measure transparency by the number of pieces of paper you have; transparency is measured by whether or not the [water fistrict] is transparent.

“Preaching to the public about transparency is a misguided gesture. Show the public you are transparent. Please take that as a challenge rather than criticism.”

The IWVWD Board of Directors will have its regular meeting in November before the Dec. 10 Prop 218 hearing. Meetings are on the second Monday of each month, with the exception of federal holidays. See iwvwd.com for information

Story First Published: 2018-10-12