A Complicated, Difficult To Understand System of Paying For Our Water.

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water-rate-iconby Matt Williams

In yesterday’s thread keithvb made the following post,

“It is obvious to me that we need a complicated, difficult to understand system of paying for our water. That way we will all be hoodwinked together.”

That is an interesting and thought provoking question.   If Keith wants to find a complicated, difficult to understand system of paying for our water, he doesn’t have to go any further than the system we have been using here in Davis for the past 10 years since 2003  (see http://archive.cityofdavis.org/finance/Utility-Rates/)

Have you ever tried explaining why your current water bill is equal to the amount it is?

Let’s take a journey through one of our current water bills, asking ourselves a few questions.  Please jump in and post a comment if you know the answer to any of these questions.

1.      How many parts does the rate structure have?

2.      What are the two parts called?

3.      Why are the parts called what they are called?

4.      What size water meter do you have?

5.      Why is the size of your meter important?

6.      Since Prop 218 mandates that billing be proportional to the cost of service for each account, how confident are you that the first part of your monthly bill meets the Prop 218 standard of proportionality?

7.      Said another way, what exactly are you being billed for in the first part of your monthly bill?

8.      In the second part of your monthly bill you are paying $1.50 per ccf in Tier 1 and $1.90 in Tier 2. How do you know whether those charges per ccf are fair?

9.      Do you care whether those charges are fair?

10.  What parts of your bill can you affect changes in?  Where will those changes appear?  When will they appear?

11.  What do the charges in the second part of your monthly bill pay for?

I will stop now with the questions.  How many of you are feeling that keith’s phrase “complicated and difficult to understand” is a perfect description of our current two-tariff rate structure?

——————————————————————————–

Now lets look at the alternative, with a couple of scenarios.  Answers to the questions will appear in the first comment in the thread.

A.      A new well is being added to the system, what part of your bill will your personal share of the cost of that well appear?

B.      You have just walked to your mailbox to mail your annual insurance premium for your homeowners policy to your insurance company, and you look across the street at the fire hydrant and wonder, “What part of my bill contains the cost for the water that will come from that hydrant if I have a fire?”

C.      Should you pay for fire hydrant water even if you never have a fire?

D.     How do you think you should pay for the costs of fire hydrant water?

E.      You just flushed your new low-flow toilet.  What part of your bill will the water for that flush appear on?  When will it appear?

F.      If Measure I passes and the surface water plant moves forward, what part of your bill will your personal share of the construction costs of the SWP appear?

G.      If Measure I passes and the surface water plant moves forward, but Council decides to ditch CBFR and continue our current rate structure, what part of your bill will your personal share of the construction costs of the SWP appear?

H.     In what part of your bill will your personal share of the annual cost of the mortgage for the purchase of the Conaway water right appear?

I.        You just got back from a long winter vacation and not a drop of water was used in your house while you were gone.  When you reach out to turn on the kitchen sink faucet, do you worry about whether water will come out or not?

J.        If you have no worries that water will come out, are there any costs that the system incurs to make sure you don’t worry?

K.      Should you pay for those “no worry costs”?  If yes, what part of the bill do you think they should be part of?

The second part of keithvb’s post yesterday said,

“Non-transparent, complex systems pushed by government are designed to hide the truth. This is just another example..”

——————————————————————————–

As you think back on your journey through the 20 questions above, which rate structure is non-transparent?  Which rate structure hides costs?  Does either rate structure qualify as “not complex”?

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About The Author

Matt Williams has been a resident of Davis/El Macero since 1998. Matt is a member of the City's Utility Commission, as well as a former Chair of the Finance and Budget Commission (FBC), former member of the Downtown Plan Advisory Committee (DPAC), former member of the Broadband Advisory Task Force (BATF), as well as Treasurer of Davis Community Network (DCN). He is a past Treasurer of the Senior Citizens of Davis, and past member of the Finance Committee of the Davis Art Center, the Editorial Board of the Davis Vanguard, Yolo County's South Davis General Plan Citizens Advisory Committee, the Davis School District's 7-11 Committee for Nugget Fields, the Yolo County Health Council and the City of Davis Water Advisory Committee and Natural Resources Commission. His undergraduate degree is from Cornell University and his MBA is from the Wharton School of the University of Pennsylvania. He spent over 30 years planning, developing, delivering and leading bottom-line focused strategies in the management of healthcare practice, healthcare finance, and healthcare technology, as well municipal finance.

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64 thoughts on “A Complicated, Difficult To Understand System of Paying For Our Water.”

  1. Matt Williams

    Answers to the lettered questions:

    A) the Supply Charge

    B) the Distribution Charge

    C) under Prop 218 that water has a cost therefore it qualifies for having a charge

    D) ?

    E) the Variable Use Charge

    F) the Supply Charge

    G) ?

    H) the Supply Charge

    I) I don’t, do you?

    J) Yes.

    K) the Distribution Charge

    —————————————–

    One more question . . .[i] “If you go through the lettered questions and answer them from the perspective of our current rate structure what are your answers?”[/i]

  2. keithvb

    I don’t see what’s unclear about the present system of paying for water.

    I pay a $23 base charge plus $1.50/ccf for tier 1 plus $1.90/ccf for tier 2.

    I don’t know why I should pay more for tier 2 water but otherwise it seems obvious what the charges are for. Base charges cover everything except the water. Tier 1 & 2 cover the cost of the water.

    Is everyone (except me) assuming that the information on the current water bill is not only inaccurate but is intentionally misleading?

  3. Matt Williams

    keithvb said . . .

    [i]”I don’t see what’s unclear about the present system of paying for water.

    I pay a $23 base charge plus $1.50/ccf for tier 1 plus $1.90/ccf for tier 2.

    I don’t know why I should pay more for tier 2 water but otherwise it seems obvious what the charges are for. Base charges cover everything except the water. Tier 1 & 2 cover the cost of the water.

    Is everyone (except me) assuming that the information on the current water bill is not only inaccurate but is intentionally misleading?”[/i]

    keith, lets start with your last question. There are a substantial number of people in Davis who believe that virtually everything that they get from the City is not only inaccurate but is intentionally misleading. davisite2 will be glad to confirm that for you. The whole populist movement in Davis is built on that basic premise.

    Water costs are only 20% of the cost total, but the variable fees represent 70% of the revenue total. Why do you think that 50% disconnect exists?

  4. Frankly

    I have never been a fan of tiered rates unless there is a direct correlation with costs to support production capacity at the tiered level.

    However, the cost differential with the existing system is minimal, and hence it is not worth the time to complain. But with the new CBFR system the costs will be exaggerated and the gap between bills for families using more water and less water will be quite large. For this reason, we need to eliminate the tiers, or scale back the differential between them.

    And correct me if I am wrong, but there is no seasonal rate adjustment in the current system.

  5. SouthofDavis

    keithvb wrote:

    > I don’t see what’s unclear about the present system
    > of paying for water. I pay a $23 base charge plus
    > $1.50/ccf for tier 1 plus $1.90/ccf for tier 2.

    I think most people have not been saying it is “unclear”, but that it is “unfair”.

    If I go to a UCD football game with three friends we will each pay $1.50 for a tier 1 coke. If Bob Dunning goes to the game with three of his kids under Family/Tier pricing his will pay $1.50 for his tier 1 coke but have to pay $1.90 for the tier 2 cokes for his kids.

  6. Michael Harrington

    I’m looking forward to March 6th!

    The Court will help us sort out the rate system. I’m not taking any detailed positions on the rates, yet, other than the three structures are a mess. The CBFR seems to have the most promise, but we shall see what happens with the Court and experts.

  7. Don Shor

    [i]”but we shall see what happens with the Court and experts.”
    [/i]
    What makes you think a judge will be able to design a more effective rate system than the experts who worked this up for the WAC? I know several of the Yolo County judges, as do you. Do you think they have the expertise to come up with something better than what it before the city right now?

  8. Matt Williams

    Frankly said . . .

    [i]”But with the new CBFR system the costs will be exaggerated and the gap between bills for families using more water and less water will be quite large.”[/i]

    Mr. Ly you stagger me.

    In the currrent billing system the gap between bills are already incredibly large. Currently one customer with a 3/4-inch meter is paying $0.05 per ccf for their annual 3,040 ccf of use while other customers are paying $3.04 per ccf for their annual 50 ccf of use. How much more exaggerated can you get than $0.05 compared to $3.04?

    In CBFR that gap will be eliminated and the 3,040 ccf customer and the 50 ccf customer will be paying the exact same $0.32 per ccf.

    The one will see a rise of $0.27 from $0.05 to $0.32. The other will see a $2.72 decrease from $3.04 to $0.32. How is that exaggeration?

  9. Michael Harrington

    Don Shor: Yes, I think the Court is well equipped to review and approve a better system. Poor Matt and Frank’s baby was worked over by the bond brokers and politicos, and what emerged is not a pretty sight.

    Use of the BWA for two years hightlights a weak point in the CBFR: the look back feature.

    Use of CBFR rather than BWA highlights the latters’ gross disparity in costs per class and tier, and heavy subsidy by low to medium users of big users.

    It’s sort of a mental health issue: the rate system has a split personality, and each highlight’s the other’s weak areas.

    Hey, I sat down in front of the CC and watched them come up with this rate system disaster. They sure did not want advice from me or Nancy Price. I suggested to the WAC and the CC not do what they were hell-bent on doing. And they did it just because the Woodland CC has flim-flammed our three lawyers and two professionals into thinking that Woodland will actually ditch us if we dont say YES on March 5.

    Read the Moody’s downgrade. Woodland’s economy is terrible. Look at the empty store fronts. And the utility shut off data.

    The voters sure as heck see it … the past month of Saturdays at the Farmers Market booth has been a frenzy of confused voters who end up taking signs and giving money and endorsements.

    My last post for today, folks. Got deadlines!

  10. Frankly

    Matt – Those are good points. I forgot about the meter size unfairness issue. I think most residential customers have a 3/4″ service. Is that correct? Regardless, I do agree with you that basing rates on meter size is unfair in many cases, and CBFR does address that. But I think this is mostly a business issue, correct?

    I am more interested in the total customer expense than I am the rates.

    Two customers with a 3/4 meter, one with no children and no lawn, and the other with several children and grass for the kids to play on… under CBFR the customer with the kids and the lawn will pay several hundred dollars more than the other customer because his usage in the high rate season will be greater, correct? Under the current rate system that difference in the total dollar amount billed would be significantly less, correct?

    I think it is the total dollar amount that folks are worried about. They are thinking “Okay, I have young kids that need a bath every day, and teenagers that take 30 minute showers, and leave the water running while brushing their teeth (even though I yell at them all the time to stop). The clothes washer and dishwasher run constantly. Thankfully we have a lawn for the kids to run around on to burn up energy that they would otherwise use to terrorize mom and dad and the family dog… put in the scorching Davis summers, the sprinklers have to come on every other day or the grass will die. And now, because of CBFR I will be spending several hundred dollars a year more for water. And, when I look at how the rates are structured, I can see that I am punished for my water needs much more than others with different family circumstances.”

    If we eliminate the seasonably adjustment, and shrink the rate differential between tiers… or preferably just get rid of both, the rate system would be more fair.

    I understand the problem is that 80% of the costs are fixed, and if we just allocated this to all property owners, it would feel unfair to those that use little water. So, I’m fine with some allocation of variable rates to cover a portion of the fixed costs. My problem is that the current seasonality adjustment and the rate gap in the tiers will be onerous to many people that cannot help their situation. Also, there are other benefits going to all Davis residents aside from the quantity of water used. The water is higher quality. It saves the environment. It reduces other household costs. Those using little water still benefit from those things, so it is fair that they pay for it too.

    However, with CBFR many of them are seeing their rates lowered. That is not fair.

    And I think it is patronizing to provide a rate structure that lowers the costs for this group just so they would vote for the project. I think most people in Davis are smarter than that… they will vote it down just because it impacts their neighbor unfairly even if they might save a few dollars.

  11. David M. Greenwald

    I think you’re missing a key point here, Frankly

    First, someone has to pay for the seasonal costs, which lead to added systemic capacity. Currently, those burdens are heaped onto the lower usage people rather than the people who actually use the water and drive the infrastructure needs.

    Second, while it is true in the short term, rates go down at the low ends as we balance things out, that’s extremely temporary, by year five, the rates are more than double present rates.

  12. Don Shor

    Most districts use tiered rates, usually to promote conservation. I think most people, other than Bob Dunning, support the idea that incentivizing water conservation is desirable. Voluntary conservation programs work up to a point; incentivizing conservation by tiered water rates is more effective. Choosing the cutoff points for the tiers is, necessarily, somewhat arbitrary. Being arbitrary is not fair.
    The Palmdale decision overturned rates that charged differently based on the type of customer. It didn’t, to my reading, say that tiered rates were inherently unconstitutional. If that is the conclusion, then most water districts in California are affected.
    But I’m not a lawyer.
    [url]http://www.somachlaw.com/alerts.php?id=143[/url]

  13. Frankly

    I think if we did a state average of water use per household in cities 50,000 to 150,000 and Davis’s numbers came in the same or lower (which I suspect they would), you cannot make the case that high water users are the cause of the added systemic capacity. What percentage of our capacity if for city use… you know, all those parks and greenbelts used by those people proud of their small lots and water-conserving lifestyle?

    Let’s try this mental exercise. Average the per household water use in the state, then find all those water-wasting Davisites that use more than the state average and banish them to Woodland.

    I bet you still need a new waterworks system for Davis.

    And, if you do need a new waterworks system, the surface water project still makes sense given the alternative.

    And if you need a new system despite the capacity impacts of the higher users, then it is unfair to make them shoulder an unfair burden of costs for the new system.

    Here is another point to ponder. Despite the creative move by Mr. Toad to try and pin opposition to Measure I as some conservative Republican effort (knee-slapping LOL), most of the people proud of their water conservation measures are also more likely to support tougher environmental regulations. A big reason why we need to convert from shallow and mid-depth wells to a surface water system is to comply with environmental regulations. So, we voted for it and now we have to pay for it. And, it appears that the same people that demand we have the regulations are most vocal in opposition for paying their share of the costs. Why is that not surprising? These things demanded by the left always sound good when it is other people’s money, right?

  14. SouthofDavis

    Don wrote:

    > I think most people, other than Bob Dunning,
    > support the idea that incentivizing water
    > conservation is desirable.

    I don’t want to speak for Bob, but I think he just wants to see a fair system that does not make big families (even families that conserve) pay more for water than others that just happen to have less kids.

    A widow that has a big lawn and hoses her driveway off once a week and takes long showers may end up using less water than a big family with kids even if their Dad is a Navy vet that makes them all the kids take 2 minute showers since five people (even if they conserve) use a lot of water since they take a lot of showers, wash a lot of dishes and wash a lot of laundry.

  15. Matt Williams

    Frankly said . . .

    [i]”Two customers with a 3/4 meter, one with no children and no lawn, and the other with several children and grass for the kids to play on… under CBFR the customer with the kids and the lawn will pay several hundred dollars more than the other customer because his usage in the high rate season will be greater, correct? Under the current rate system that difference in the total dollar amount billed would be significantly less, correct?”[/i]

    Although individual use patterns will vary, let’s say that the customer with a 3/4-inch meter with no lawn and no children uses 5 ccf per month (that is 123 gallons per day which is more than double the 55 gallons per person per day standard currently in place for national and state agencies). Let’s also say that the home with several children and grass uses 12.5 ccf indoors (three kids and 2 adults worth) and 12.5 ccf for the lawn, for a total of 25 ccf per month. Under the current billing system the 5ccf home is paying $3.04 per ccf and the 25 ccf home is paying $0.61 per ccf.

    Add to that the $1.50 per ccf variable charge the 5 ccf home is paying $4.54 per ccf and the 25 ccf home is paying $2.22 per ccf when you recognize that 7 ccf are at the Tier 2 rate.

    Under CBFR the 5 ccf home will pay $4.23 per ccf and the 25 ccf home will pay $3.33 per ccf.

  16. Matt Williams

    Frankly said . . .

    [i]” And, when I look at how the rates are structured, I can see that I am punished for my water needs much more than others with different family circumstances.”[/i]

    That is one way to look at it. The other way to look at it is that the gravy train that we have been riding for free for the past 10 years has been exposed for what it is, and now we are no longer be going to get all that gravy for free.

  17. Matt Williams

    Frankly said . . .

    [i]”And I think it is patronizing to provide a rate structure that lowers the costs for this group just so they would vote for the project. I think most people in Davis are smarter than that… they will vote it down just because it impacts their neighbor unfairly even if they might save a few dollars.”[/i]

    In all the thousands of hours that Frank Loge and I and Bartle Wells and Staff and Kelly Salt have put into the analysis and modeling and legal due diligence of this rate structure, there has not been one single millisecond that has been spent thinking about lowering the costs for any group just so they will vote for the project.

    The project is the project. it will stand or fall on its own merits. The rate structure is the rate structure it solves a proportionality issue ($3.04 per ccf vs $0.61 per ccf in your example) that exists regardless of what decision is handed down by the voters vis-a-vis the project.

  18. Frankly

    Matt – I don’t accept punishment for the sins of my father. If there was a gravy train before, then stop the train. But don’t punish those that had no part in designing the prior rate system.

    [i]Under CBFR the 5 ccf home will pay $4.23 per ccf and the 25 ccf home will pay $3.33 per ccf.[/i]

    You make the case that 80% of the costs are fixed, but you still boil it down to a per ccf cost. Of course higher users will have a lower cost per unit given that there is a fixed cost component. That is simply an economies of scale thing. Just like a person that drives more miles. When considering the fixed cost of their car loan, driving more miles means a lower cost per mile. However, the difference is that the higher-mileage driver is not being punished by higher gas usage tiers.

    Have you considered the seasonal rate impact of the look-back for the 25 ccf home? Might this user see rates higher than $4.23 per ccf after a summer where relatives visit and the weather is hotter than normal?

    I was just thinking about another issue with the look-back component… might we need some type of new disclosure for home sales? As a mortgage lender, I would need to determine true borrower cash flow and very high monthly water payments could be an issue.

  19. Frankly

    [i]In all the thousands of hours that Frank Loge and I and Bartle Wells and Staff and Kelly Salt have put into the analysis and modeling and legal due diligence of this rate structure, there has not been one single millisecond that has been spent thinking about lowering the costs for any group just so they will vote for the project.[/i]

    That is good to read. I am responding to others that have commented that the CBFR lowers rates for 70% of the residents and changing it would risk causing more no votes. I took that as some evidence that this was a consideration in the design.

    [i]The project is the project. it will stand or fall on its own merits. The rate structure is the rate structure it solves a proportionality issue ($3.04 per ccf vs $0.61 per ccf in your example) that exists regardless of what decision is handed down by the voters vis-a-vis the project. [/i]

    I have two problems/worries:

    1 – That the measure will fail because of voter perceptions of rate system unfairness, and complexity.

    2 – Penalizing rate payers with large families, and/or large yards, and/or a love of gardening.

    The biggest of these two problems/worries is #1. Other than that, I appreciate ALL the great work you have done and continue to do. The people in this city owe you a lot of gratitude… even as some of us complain about the solution you helped design. It is a solution that is 85% perfect in my opinion.

  20. David M. Greenwald

    “Matt – I don’t accept punishment for the sins of my father. If there was a gravy train before, then stop the train. But don’t punish those that had no part in designing the prior rate system.”

    You’re not being punished. You’d have to pay a portion is that is more equitable than the current system. In fact, you’re still paying less per gallon than people who use a lot less than you.

  21. Matt Williams

    Frankly said . . .

    [i]”Matt – I don’t accept punishment for the sins of my father. If there was a gravy train before, then stop the train. But don’t punish those that had no part in designing the prior rate system.”[/i]

    Frank, where is the punishment? Every customer is paying the exact same $ per ccf for the water they use in the Variable Use Fee. Every customer is paying the exact same $ per ccf for the water they reserve in the Supply Fee.

    All we are doing is stopping the gravy train. There are no reparations. Just proportionality.

    —————————————–

    The elimination of the gravy train revolves around is a simple step-wise process that goes as follows:

    The engineers who have designed and continue to design our new water system ask themselves a simple question that the Davis Water Advisory Committee spent a whole lot of time pondering, “How much capacity should the system have?”

    The first step is to study system-wide aggregate usage history to determine when the peak usage period for the system will be. For the Davis water system design the result of that initial step is that the peak usage period is from 4:00 AM to 8:00 AM during the summer irrigation period. That answer determines how many bricks should be in the “bricks and mortar” of the system.

    The second step is to effectively “interview each” and every customer to determine what their individual usage needs to be during the peak usage period. In effect we are taking all the bricks that were identified in the first step and purring them in a big pile on the floor, and at the end of each customer interview the customer walks up to the pile and takes out of the pile the number of bricks that are needed to meet that customer’s peak usage period needs. After the engineers complete their 16,400 “interviews” there will be no bricks left in the pile.

    The third step is for the engineering/construction team to assign an overall design/construction cost to the system. That is the cost for the sum total of all of the bricks that were identified in the first step. Determining and incurring the overall design/construction cost is the “cost creation” part of the principle of cost creation accountability. Now lets look at the “accountability.”

    The fourth step of the process is to mathematically allocate the total costs of the system identified in the third step to individual bricks. Each brick gets the exact same proportional amount of the costs, not a penny more, not a penny less.

    The fifth step is to ask each customer to pay for the bricks they hold in their hands. They are accountable for their purchase decision, just as customers who walk up to the cash register in a store are accountable for the items they are purchasing. They hand the cashier their VISA card and the store owner knows that VISA will be accountable for providing the store with cash, and the customer knows that s/he will be accountable for the VISA bill payment when it arrives in the mail. The customer at the store can not tell the store owner that someone else in line will pay for the items, just as each water system customer can not tell the water agency that some other customer will pay for the bricks they hold in their hands.

    The sixth step is for the water agency, just like VISA does, to send the customer a monthly bill for the cost of their bricks . . . and then hold the customer accountable for paying that monthly bill.

    ——————————

    That is a step by step description of the process of eliminating the gravy train. In our current rate structure, no matter how many bricks you are holding in your hands at the end of the process, you only have to pay for one brick.

  22. David M. Greenwald

    1 – That the measure will fail because of voter perceptions of rate system unfairness, and complexity. “

    “2 – Penalizing rate payers with large families, and/or large yards, and/or a love of gardening.”

    It’s striking how at odds those statements are. First, you are concerned that the measure will fail by voter perceptions and then you feed those perceptions with your overblown and really inaccurate rhetoric. Look at the numbers, large families in particular and large yards are not punished or penalized, they are simply paying a more appropriate portion of their share than they were previously when their usage was actually being heavily subsidized by the small users.

    I can’t help but believe that you want to shift more burden to the lower end users even though even under CBFR they are paying at least 25% more per gallon than the high end users. I can’t see how you can defend that arrangement.

  23. Matt Williams

    SouthofDavis said . . .

    [i]”A widow that has a big lawn and hoses her driveway off once a week and takes long showers may end up using less water than a big family with kids even if their Dad is a Navy vet that makes them all the kids take 2 minute showers since five people (even if they conserve) use a lot of water since they take a lot of showers, wash a lot of dishes and wash a lot of laundry.”[/i]

    Agreed SouthofDavis, and under CBFR as approved by the City Council both the widow and the big family are paying the exact same $0.86 per ccf rate for each and every gallon of water that they use. And both the widow and the big family are paying the exact same $0.32 per ccf rate for each and every gallon of water that they “reserve” . . . the bricks that they hold in their hands at the end of the system building exercise described above.

    CBFR makes that [u]transparently clear[/u] for each and every customer.

  24. Matt Williams

    Frankly said . . .

    [i]”I have two problems/worries:

    1 – That the measure will fail because of voter perceptions of rate system unfairness, and complexity.

    2 – Penalizing rate payers with large families, and/or large yards, and/or a love of gardening.

    The biggest of these two problems/worries is #1. Other than that, I appreciate ALL the great work you have done and continue to do. The people in this city owe you a lot of gratitude… even as some of us complain about the solution you helped design. It is a solution that is 85% perfect in my opinion.”[/i]

    Frank, I agree with you, and the whole point of the questions in the article was to show that the current rate structure is infinitely more complex and harder to [u]understand[/u] than CBFR is. The reality is that no one has bothered to take the time to even begin to try and understand it. It is the old shoe that we take for granted.

    What we are dealing with here are the dynamics of change. keith’s posts clearly illustrate that. He appears to be following a “less is more” approach when he says, [i]”Is everyone (except me) assuming that the information on the current water bill is not only inaccurate but is intentionally misleading?”[/i]

    Change is always painful especially in situations like this where the economics are zero sum. That means that in ending the gravy train some people will feel their ox is being gored and others will feel that an inequity is being righted.

  25. Frankly

    Matt – thanks for the bricks and steps.

    David – I was thinking again about this fact that yardless residents rely on the parks… and I am betting that our city-use of water for these parks is the primarly capacity culprit. So, yardless residents should pay more in water fees for using the parks.

  26. Frankly

    [i]First, you are concerned that the measure will fail by voter perceptions and then you feed those perceptions with your overblown and really inaccurate rhetoric[/i]

    David – refer to Dunning’s articles in the Enterprise.

  27. dlemongello

    Frankly said:
    “Matt – I don’t accept punishment for the sins of my father. If there was a gravy train before, then stop the train. But don’t punish those that had no part in designing the prior rate system.”
    It is not retroactive, therefore it is only addressing future “sins”, certainly not the past “sins”. It is doing exactly that, stopping the off kilter train and setting it straight.

  28. dlemongello

    Most yardless residents live in complexes with landscaping and will be paying indirectly via their landlords to keep that landscaping intact and for their indoor use. We all have equal access to the public amenities. Are you going to say next that people who use the parks more should pay more of the parks tax or people without children should pay less of the schools tax? We all pay equally for the public domain.

  29. rusty49

    “Most yardless residents live in complexes with landscaping and will be paying indirectly via their landlords to keep that landscaping intact and for their indoor use.”

    Not according to David and DT Businessman…..lol

  30. Michael Harrington

    Matt wrote: “In all the thousands of hours that Frank Loge and I and Bartle Wells and Staff and Kelly Salt have put into the analysis and modeling and legal due diligence of this rate structure, there has not been one single millisecond that has been spent thinking about lowering the costs for any group just so they will vote for the project.”

    That may be true, but I was there the night of January 15, 2013, when the CC, led by Brett Lee, eliminated the pay go portion, and went to 100% financing and pushed back a lot of the interest costs until year 6, or the year after the current 5 year rates expire. This reduced the rate spike in the first 5 years, but added tens of millions of dollars to the total financing costs.

    There were subtle, and blatant, comments by the public, with knowing looks and smiles by CC members, that smoothing the spike would lead to less voter outrage, and increase the chances of Measure I passing. It was gross to watch, and I felt sick to my stomach at the end. I could not believe the CC would vote 5/0 to completely toss out the conservative recommendation by staff to use pay-go for well system improvements, instead put the whole thing on the public’s credit card.

  31. Frankly

    dlemongello – Come on now. You can accept this logic. If you are a proud minimalist proudly wearing your conservation badge on your sleeve, then you would need to rely on OPL (Other People’s Lawns). Since all those mean wealthy people have gates around their lawns… that would leave the city parks and open spaces as the only OPL option for the rest.

    I don’t use OPL very much having some grass in my back yard.

    So, if you benefit more from all the parks and open spaces, and those parks and open spaces have caused the need for a mega-water system to meet peak capacity, then I think you should have to pay more for the water.

    For me, this justifies some higher fixed costs to the rate formula.

    Look at it this way… let’s say that 99% of Davis residents lived in yard-less apartments and condos, and only 1% had homes with yards. Let’s say that these yards accounted for 10% of the water capacity need and it is 10-times as much as the average water capacity need for the average of the other 99%, but the city parks and open spaces accounted for 40% of the water capacity need. I guess you would say that those lucky 1% should pay 10-times as much as those conserving 99% to help fund the overall system. I would say that the 99% benefit disproportionately from the parks and open-spaces because they have no other alternative (require OPL)… so they should have some premium attached to their water bill for funding the water capacity of OPL that they rely on.

    Look at it another way… let’s say that the liberal progressive minimalists get their way and we outlaw private grass lawns. So now 100% require OPL and the only option is the city-maintained parks and open spaces. Who then would have to pay for the water capacity needed for all those parks and open spaces?

    Of course that question is rhetorical… it goes to prove how problematic it is using other people’s money to pay for things.

  32. dlemongello

    Honestly, your assertions and questions baffle me. I’ll try and address some of it. The answer to the last question is everyone pays for it. Who is “other people”? Everyone but yourself is “other people”. While “everyone” is other people including yourself. Do you resent paying for our shared open spaces, maybe because you don’t use them?

    What do you use your grass for? I don’t much know what the use of grass is other than maybe kids playing. It just happens that a preschool I walk by almost everyday has wood chips covering the entire play area. It’s even softer than grass to fall on. But I guess you have a use and that’s fine. Even if it’s just what you want to look at, an aesthetic use, that’s fine. It’s just that there is a cost associated with it. There is a monetary cost and an environmental cost. The environmental cost is that that lawn does not belong there. I happen to think the open spaces should not be spans and spans of grass, same problems, environmental and monetary costs. When we go out to natural places do we require grass or can we enjoy whatever that natural environment provides? Why not be more natural and sustainable in town as well? The answer; the status quo requires unsustainable habits that cause us to need a big expensive water system to maintain the status quo.
    The crisis and pending expense still is not bad enough for us to see the errors of our ways. What will it take? I wish I knew.

  33. SouthofDavis

    Matt wrote:

    > Agreed SouthofDavis, and under CBFR as approved by
    > the City Council both the widow and the big family
    > are paying the exact same $0.86 per ccf rate for
    > each and every gallon of water that they use.

    This is why so many people are coting NO since the YES people keep trying to play tricks on what the water really costs.

    Matt knows what he wrote is untrue, but he just wants to trick people (a big family will not pay the exact same $0.86 per ccf rate for each and every gallon” as a widow using less water next door…

  34. dlemongello

    The managers of those areas would be doing so, as long as they were taking proper responsibility for their jobs. And grass is not the only thing that’s green. In fact, grass is not very “green”, of you get my drift.

  35. dlemongello

    SOD, but Matt is telling the truth. LOOK at your 218 notice, it’s all right there. Under CBFR for both the variable and supply parts of the bill, everyone pays the same amounts per gallon/ccf, then the fixed costs depend on pipe size. What that does is still result in more cost per gallon the less you use, but it is a lot closer than the old rate system where low users subsidize high users even more.

  36. Matt Williams

    SouthofDavis said . . .

    [i]”This is why so many people are coting NO since the YES people keep trying to play tricks on what the water really costs.

    Matt knows what he wrote is untrue, but he just wants to trick people (a big family will not pay the exact same $0.86 per ccf rate for each and every gallon” as a widow using less water next door…”[/i]

    SouthofDavis, what I wrote is 100% true. 100%. Under CBFR you pay for what you use in the Variable Use Charge. Each and every customer multiplies the exact same Variable Use Charge times their actual use and gets the amount shown on their bill.

    As I said in my response to you, which you chose to ignore, [i]”And both the widow and the big family are paying the exact same $0.32 per ccf rate for each and every gallon of water that they “reserve” . . . the bricks that they hold in their hands at the end of the system building exercise described above.” [/i]

    If a customer so chooses their reservation of dedicated system capacity to meet their needs (the Supply Charge) can be set at their own discretion with absolutely nothing to do with the amount of water they have used. Just as what happens when you go in to your tax accountant each spring, and together you and your accountant decide how much your quarterly estimated tax payments should be (or if you use the W4 system, how high your withholding should be), you can decide to be billed for any Supply Charge amount you like.

    When dealing with the IRS, you set your estimated tax payments knowing that if you under pay your estimated taxes, you will have to write a big check to the IRS the next spring (and possibly even have to pay a big penalty). As a result for the vast majority of people, the default value for your estimated tax payments is a value equal to your previous year’s taxes. The reason that is chosen, is that the past is more often than not a good predictor of the future.

    Since the prior year’s actuals work so well when dealing with the IRS, it makes logical sense to choose the prior year’s actual water use in the peak demand period as the “first default” for setting the next year’s Supply Charge payments.

    With that said, in CBFR going forward there is a “second default” for setting your monthly Supply Charge. That “second default” value is the average peak period usage for all the accounts in the city. If you choose the “second default” just like for your income taxes there is an annual reconciliation where the amount you paid in Supply Charges, based on the city-wide average, compares to your actual usage in the just completed May-October period. If you used more than the city-wide average, your November bill will include a one time “true-up” payment. If you used less than the city-wide average, your November bill will include a one time “true-up” credit.

    Further, if you don’t want to use either the “first default” or the “second default” then you can set your Supply Charge at any level you want, even $0.00 if you so choose. Then, again just like for your income taxes there is the annual reconciliation where the amount you elected to pay in Supply Charges is compared to your actual usage in the just completed May-October period. If you used more than your elected value, your November bill will include a one time “true-up” payment. If you used less than your elected value, your November bill will include a one time “true-up” credit.

    —————————

    In summary, the Distribution Charge is independent of any and all current period usage. The Supply charge is a “reservation” for system capacity that can be 100% independent of current period usage. On the other hand, the Variable Use Charge is 100% tied to current period usage and [u]everyone pays the exact same $/ccf rate[/u]. Everyone . . . no exceptions . . . no Papal Dispensations . . . eeveryone treated exactly the same . . . parity . . . proportionality . . . fairness.

  37. Matt Williams

    dlemongello said . . .

    [i]”What that does is still result in more cost per gallon the less you use, but it is a lot closer than the old rate system where low users subsidize high users even more.”[/i]

    Donna, as has been explicitly pointed out in this comment thread, if you extrapolate dollars that a customer is paying for things other than use, then the logical units to express tat extrapolation in are $/ccf. That extrapolation does not change the reality that in the three-part tariff that CBFR uses, neither the Distribution Charge nor the Supply Charge are for a customers actual use. In the two-part tariff that we currently use in Davis neither the Base Rate Charge nor the Meter Retrofit Charge bill for actual use, only the Metered Use Charge bills for actual use.

  38. dlemongello

    Matt, in your 9:30 am post

    In the currrent billing system the gap between bills are already incredibly large. Currently one customer with a 3/4-inch meter is paying $0.05 per ccf for their annual 3,040 ccf of use while other customers are paying $3.04 per ccf for their annual 50 ccf of use. How much more exaggerated can you get than $0.05 compared to $3.04?

    How did you get those numbers?
    I tried $23 X 12 months each and then $1.50 per ccf (although some of it may be $1.90) but did not get anything close to your numbers for 3/4″ pipe customers.

  39. Matt Williams

    Donna, if you take the current annual fixed fee $138.00 ($23 times 6 bimonthly fixed fees) and divide it by 50 you get $ 2.80. If you divide that $138.00 by 3,040 you get $0.045. I had mis remembered 138 as 152 (the gpcd figure for Davis in 2011) So the absolute accurate numbers are $2.80 and $0.05 rather than $3.04 and $0.05.

  40. dlemongello

    But Matt, to get the actual cost per ccf you have to add the variable charges as well. The higher user still pays less per ccf but the numbers/amounts are different. And although 50 ccf is very low but possible, 3040 is unlikely in a real 3/4″ scenario I think. A comparison to maybe 400ccf would be more likely. So the 50ccf X $1.50+ $138 pays $4.26/ccf and the 400 ccf X $1.60+$138 pays $1.94/ccf right now. Would you kindly provide the comparable CBFR numbers for us?

  41. Matt Williams

    Donna if you go to:

    [b]Matt Williams

    02/19/13 – 11:27 AM[/b]

    in this thread you will see that to the extrapolated $/ccf for the fixed fee I add the actual $/ccf for the variable fee to compute an aggregate extrapolated $/ccf rate for the purposes of comparison.

  42. Edgar Wai

    [quote]The first step is to study system-wide aggregate usage history to determine when the peak usage period for the system will be. For the Davis water system design the result of that initial step is that the peak usage period is from 4:00 AM to 8:00 AM during the summer irrigation period. That answer determines how many bricks should be in the “bricks and mortar” of the system.[/quote]

    Re: Matt

    There was a question ([url]https://davisvanguard.org/index.php?option=com_content&view=article&id=6126:sunday-commentary-ii-dunnings-campaign&catid=50:elections&Itemid=83&cpage=30#comment-176547[/url]) about the storage capacity of the system. When a system is designed to meet hourly peak use, it is potentially illogical distribute the Supply Charge by monthly or bi-monthly consumption during the summer. This is because it ignores the cooperation among the homeowners.

    If There is an irrigation schedule so that the homeowners do not cause a peak demand from 4am to 8am, then the system cost would be lowered. What steps did the WAC take to inform the homeowners so that the system could be built at the minimal size?

  43. Edgar Wai

    When the stress to the system is that of an hourly peak, it is possible that a user who uses more water in terms of volume but does not cause the hourly peak, should pay less for the system cost.

  44. Matt Williams

    Edgar Wai said . . .

    [i]”There was a question about the storage capacity of the system. When a system is designed to meet hourly peak use, it is potentially illogical distribute the Supply Charge by monthly or bi-monthly consumption during the summer. [b]This is because it ignores the cooperation among the homeowners.[/b]”[/i]

    Edgar you have used the term “cooperation among homeowners” a number of times. The meaning of that term with respect to the water system eludes me. Can you explain what you mean by “cooperation among homeowners”?

  45. Matt Williams

    Edgar, the peak demand is currently at a rate of 32,998,622 gallons per day. The current storage capacity of the two above ground storage tanks is 9,000,000 gallons. The deep aquifer wells running flat out can produce a firm capacity of 13,907,449 gallons per day. So the system has a deficit of approximately 10,000,000 gallons per day, which it addresses by introducing the high contaminant water from the intermediate aquifer wells.

    Yes you could stage the irrigation somewhat, but if you irrigate during the night you are subjecting your plants to mildew infestations. If you irrigate after 8:00 AM you are getting into the heat of the day and your the irrigation mist produced by any of your sprinklers will evaporate in large part before it reaches your plants. That is a waste of water.

    I’m not sure what you mean by “What steps did the WAC take to inform the homeowners so that the system could be built at the minimal size?” Can you explain? I sense that the kind of steps you are asking about would not be taken by the WAC, but rather by the Natural Resources Commission.

  46. Edgar Wai

    By cooperation among homeowners, I mean having a watering schedule, or having watering tank that uses off-hour capacity to charge up.

    Which of the following did WAC do?

    a) Look at the database with the 16000 accounts and tally their usage
    b) Identify the peak use -> in this case, the peak use is in the granularity of hours.
    c) Estimate the cost of the water system to support the current usage pattern.
    d) Estimate the cost of the water system if there is no peak hourly use (that every homeowner can somehow average out their uses so that there is no peak use)
    e) Inform the homeowners about the cost of the two water systems and their current use pattern. Ask them which one they prefer, and how much capacity they would like the water system to budget for them (and with that, they will know approximately how much it will cost them).

  47. Matt Williams

    Edgar, your watering tank is a good concept in an ideal sense; however, as you drive around Davis, how many such watering tanks have you ever seen? I have seen one or two. There are a couple of biochemists on Oak Avenue that have one. Is it your intention to pass a law to make such tanks mandatory?

    Regarding the steps the WAC took in conjunction with its support staff and consultant support:

    a) Yes, that is what was done.

    b) No, because the frequency of meter reading is bi-monthly. There is no available hourly data.

    c) Yes, that is what was done.

    d) No, there was no point in doing that given the evapotranspiration realities of Davis’ climate.

    e) Yes, in the transparent public process that was done. Any citizen was welcome to come to the WAC to provide public testimony. The WAC heard any and all who came. In addition, all the WAC meetings were both televised and recorded. Links to all the recordings are on the WAC website. Have you watched any of the videos The CBFR rate system provides each and every user the opportunity to select the amount of their water “reservation” and then be billed for that reservation amount from January through October. If a customer chooses their own “reservation” amount rather than using the first default (their historical average) then a reconciliation of actual use to their “reservation” will take place in November and a “true-up” payment or credit will appear on their November bill.

  48. Edgar Wai

    In Proportional Billing the bill can look like this:

    [img]http://skylet.net/docs/2013-02-20-0028-ProportionalBill.png[/img]

    The piechart shows various types of costs.
    Basic accountability is implemented by showing the matching percentages.

    [Fundamentals of Proportional Billing] ([url]https://davisvanguard.org/index.php?option=com_content&view=article&id=6112:let-our-legacy-be-clean-water&catid=50:elections&Itemid=83&cpage=30#comment-176326[/url])

  49. Matt Williams

    Edgar, as you look at optimal plant sizing (I think that is where you are going with this line of questioning) it is worthwhile looking at the plant sizing and plant costing history over the past 15 months..

    When we downsized the plant from 40 mgd to 30 mgd there was minimal cost reduction to the following components of the system

    1) the intake facility in the Sacramento River,

    2) right of way and land aquisition,

    3) the raw water pipeline from the river to the treatment plant,

    4) the treated water pipelines from the treatment plant to the two cities, and

    5) the modifications that each city has to make to their existing distribution systems in order to receive the surface water and effectively blend the surface and groundwater together.

    From 40 to 30 the cost reduction on those five items was minimal. From 30 to 24 (12 to 6 in the Davis share) the cost reduction on those five items would be zero. That means that the only place where further cost savings could be obtained would be in the treatment plant itself.

    The treatment plant costs have three major components,

    A) the “soft costs” of environmental documents, permitting documents, engineering, design, legal counsel, agency administration and program management,

    B) the building of the treatment facility’s shell (e.g. walls and roof and heating equipment and light fixtures, etc), and

    C) the building of the treatment facility’s pipes and tanks and processes.

    Downsizing from 30 to 24 will not reduce A) especially since the ASR capabilities will require their own share of all the subcomponents of A). Downsizing from 30 to 24 will not reduce B) because it is much cheaper to build an original building a bit larger than it is to modify/expand the building at a later date. So that means the only place that we can reduce the treatment plant costs is in category C).

    When going down from 40 to 30 we saw a decrease in treatment plant costs from $123.45 million to $105.03, which is almost exactly 15%. The capacity reduction was 25% in aggregate; however, if you look at just the Davis portion a 33% reduction (from 18 to 12) produced only a 15% savings. Going from 30 to 24 will be lucky to produce much more than a 5% savings in my opinion because we have already squeezed down C) by grabbing the easy savings. Further savings will be much harder. So, Davis would be reducing its portion of the capacity by 50% (from 12 to 6) and only realizing at most a 10% cost savings (double the 5% because the whole 5% aggregate savings would theoretically flow to Davis).

    So bottom-line I find the numbers to be very compelling that the current 30 mgd plant size is optimal.

  50. Edgar Wai

    EW: b) Identify the peak use -> in this case, the peak use is in the granularity of hours.

    MW: b) No, because the frequency of meter reading is bi-monthly. There is no available hourly data.

    For this question, I meant the system’s meter, not the meter at the user’s site. You have to have this data to know that the peak is at 4am to 8am and use that to size the system. It was implied that it was known. I just asked for the sake of completeness.

    EW: d) Estimate the cost of the water system if there is no peak hourly use (that every homeowner can somehow average out their uses so that there is no peak use)

    MW: d) No, there was no point in doing that given the evapotranspiration realities of Davis’ climate.

    This was not a question about the climate. It is a question about personal behavior change and personally investments in water tanks and other water-saving equipment.

    When you have the peak use data (the data that allows you to say 4am to 8am is the peak hours), I suppose you also have the data on how low the demand gets during the day. Take the average of the whole day and estimate the cost of a plant to support that alone. After doing so, you get two estimate:

    1) The estimate to support a demand pattern that has a peak hour use.
    2) The estimate to support a demand pattern that has uniform use throughout the day.

    The difference between these two numbers tells how much it is worth for the user to invest in equipment to make his demand pattern uniform.

  51. Matt Williams

    Edgar Wai said . . .

    [i]”In Proportional Billing the bill can look like this:
    The piechart shows various types of costs.
    Basic accountability is implemented by showing the matching percentages.

    [Fundamentals of Proportional Billing]”[/i]

    Edgar, Proportional Billing would make total sense in a system where the costs are 100% variable or close to 100% variable. If that is not the case, Proportional Billing is extremely fiscally unstable for the agency and it will result in many unplanned emergency rate increases for the customers, which will mean extreme fiscal instability for them as well.

    The reason that is the case is that Proportional Billing the way you have described it has 100% variable charges and 0% fixed charges. That means that when five units of conservation cause five units of decreased consumption, five units of revenue are lost. In the Davis system 80% of the costs are fixed costs and 20% of the costs are variable costs. That means that when five units of conservation cause five units of decreased consumption, only one unit of cost is saved. The bottom-line is that when five units of conservation cause five units of decreased consumption, four units of budget deficit are created. Further, the more you conserve the greater the budget deficit is. The only way to deal with the deficits is to raise rates. Why do you want to create such a fiscally unstable rate structure?

    CBFR was designed to permanently and completely eliminate that fiscal instability for both the agency and its customers.

  52. Edgar Wai

    In a cooperation / City Project that makes sense, it should be obvious to the end user that the city is saving money for them by having a group rate.

    When you show the two estimates above, you are making it obvious for the User to judge whether the City is efficient.

    [i]”If I try to build a water tank myself to make my demand pattern uniform, it will cost me $100 per month. But if the City simply invest in a bigger plant, it will only cost me $10. It makes sense to work with the city. Everyone saves money that way.”[/i]

    That math will show how much money the City is saving for everyone.

  53. Matt Williams

    Edgar Wai said . . .

    02/20/13 – 12:48 AM

    EW: b) Identify the peak use -> in this case, the peak use is in the granularity of hours.

    MW: b) No, because the frequency of meter reading is bi-monthly. There is no available hourly data.

    For this question, I meant the system’s meter, not the meter at the user’s site. You have to have this data to know that the peak is at 4am to 8am and use that to size the system. It was implied that it was known. I just asked for the sake of completeness. [b]I believe it was extrapolated [/b]

    EW: d) Estimate the cost of the water system if there is no peak hourly use (that every homeowner can somehow average out their uses so that there is no peak use)

    MW: d) No, there was no point in doing that given the evapotranspiration realities of Davis’ climate.

    This was not a question about the climate. It is a question about personal behavior change and personally investments in water tanks and other water-saving equipment.

    When you have the peak use data (the data that allows you to say 4am to 8am is the peak hours), I suppose you also have the data on how low the demand gets during the day. Take the average of the whole day and estimate the cost of a plant to support that alone. After doing so, you get two estimate:

    1) The estimate to support a demand pattern that has a peak hour use.
    2) The estimate to support a demand pattern that has uniform use throughout the day.

    The difference between these two numbers tells how much it is worth for the user to invest in equipment to make his demand pattern uniform. Agreed, and the end result is that virtually none of the 16,000 customers have invested in such tanks, especially since you have to factor in the reduction in the value of the home that will happen because of the ugly tank that any prospective buyer will have to incorporate into their aesthetic sensibilities.

    The tank at the Oak Avenue house owned by the teo biochemists is needed for the biochemical laboratory that they have in their detached garage. The conduct experiments there and they have to purify the tank water to extremely high standards in order to proceed with their scientific experiments. For them aesthetics are a minor concern.

  54. Matt Williams

    Edgar Wai said . . .

    [i]”In a cooperation / City Project that makes sense, it should be obvious to the end user that the city is saving money for them by having a group rate.

    When you show the two estimates above, you are making it obvious for the User to judge whether the City is efficient.

    “If I try to build a water tank myself to make my demand pattern uniform, it will cost me $100 per month. But if the City simply invest in a bigger plant, it will only cost me $10. It makes sense to work with the city. Everyone saves money that way.”

    That math will show how much money the City is saving for everyone.”[/i]

    True, but each customer will have to get a construction estimate for building a storage tank on their property. Once that construction estimate is in hand you would add that number to the amount that the value of their home would go down, then you would divide that total by the $90 per month they would save and they would have a payback period. At $90 per month, that would be $1,080 per year saved. How much do you think the design and construction of the tank and its piping would cost? Would you use gravity flow, or would you have to have a pump to provide water pressure?

  55. Edgar Wai

    As stated in here ([url]https://davisvanguard.org/index.php?option=com_content&view=article&id=6112:let-our-legacy-be-clean-water&catid=50:elections&Itemid=83&cpage=30#comment-176326[/url]), I am not an advocate of Proportional Billing, however, proportional billing does not necessarily mean fixed rate. The screenshot I showed you is not a fixed rate system, but a revenue matching system. It and CBFR have the same stability for the agency. In general it has [b]less[/b] stability than CBFR for the customers.

    But both of the are less stable compared to Equal Discount.

    Please see:
    [ Accountability, fairness, and stability issue of CBFR ] ([url]https://davisvanguard.org/index.php?option=com_content&view=article&id=6129:commentary-lost-in-all-of-the-fuss-cbfr-remains-the-most-fair-rate-structure&catid=50:elections&Itemid=83&cpage=60#comment-176794[/url])
    [ Other Stablity issues of CBFR ] ([url]http://skylet.net/docs/2013-02-18-2347-WaterRatesInfoList.htm[/url])

    I think for all billing methods, the bill should have the information I listed in the screenshot (in addition to other information relevant to the specific billing structure).

    * * *

    EW: The difference between these two numbers tells how much it is worth for the user to invest in equipment to make his demand pattern uniform.

    MW: Agreed, and the end result is that virtually none of the 16,000 customers have invested in such tanks, especially since you have to factor in the reduction in the value of the home that will happen because of the ugly tank that any prospective buyer will have to incorporate into their aesthetic sensibilities.

    The change is not limited to water tank. What is the second number that allowed you to make the conclusion above:

    1) The estimate to support a demand pattern that has a peak hour use. -> $245 million for Woodland and Davis
    2) The estimate to support a demand pattern that has uniform use throughout the day. -> [b]???[/b]

  56. Matt Williams

    Edgar Wai said . . .

    [i]”The change is not limited to water tank. What is the second number that allowed you to make the conclusion above:

    1) The estimate to support a demand pattern that has a peak hour use. -> $245 million for Woodland and Davis
    2) The estimate to support a demand pattern that has uniform use throughout the day. -> ??? “[/i]

    Edgar, the effective answer to the –> ??? is “$245 million for Woodland and Dav”

    Why is that?

    When we downsized from 40 mgd to 30 mgd there was minimal cost reduction to the following components of the system

    1) the intake facility in the Sacramento River,
    2) right of way and land aquisition,
    3) the raw water pipeline from the river to the treatment plant,
    4) the treated water pipelines from the treatment plant to the two cities, and
    5) the modifications that each city has to make to their existing distribution systems in order to receive the surface water and effectively blend the surface and groundwater together.

    From 40 to 30 the cost reduction on those five items was minimal. From 30 to 24 (12 to 6 in the Davis share) the cost reduction on those five items would be zero.

    That means that the only place where further cost savings could be obtained would be in the treatment plant itself. The treatment plant costs have three major components,

    A) the “soft costs” of environmental documents, permitting documents, engineering, design, legal counsel, agency administration and program management,

    B) the building of the treatment facility’s shell (e.g. walls and roof and heating equipment and light fixtures, etc), and

    C) the building of the treatment facility’s pipes and tanks and processes.

    Downsizing from 30 to 24 will not reduce A), because it is already as low as it can go. Downsizing from 30 to 24 will not reduce B), because it is much cheaper to build an original building a bit larger than it is to modify/expand the building at a later date. So that means the only place that we can reduce the treatment plant costs is in category C).

    When going down from 40 to 30 we saw a decrease in treatment plant costs from $123.45 million to $105.03, which is almost exactly 15%. The capacity reduction was 25% in aggregate; however, if you look at just the Davis portion a 33% reduction (from 18 to 12) produced only a 15% savings. Going from 30 to 24 will be lucky to produce much more than a 5% savings in my opinion because we have already squeezed down C) by grabbing the easy savings. Further savings will be much harder. So, Davis would be reducing its portion of the capacity by 50% (from 12 to 6) and only realizing at most a 10% cost savings (double the 5% because the whole 5% aggregate savings would theoretically flow to Davis).

  57. Matt Williams

    Edgar, to centralize our continuing discussions of this topic a Message Board thread has been created. Using that thread means the the discussion does not have to jump around from place to place. The link to that thread is [url]https://davisvanguard.org/index.php?option=com_kunena&func=view&catid=2&id=996&Itemid=192#996[/url] which can also be reached by going to the bottom of this screen and clicking on the [b]Bulletin Board[/b] link

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