Commentary: Addressing Misconceptions About CBFR

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water-rate-iconI was told yesterday that I should be “the prototype HELL NO family.”  But whether I am or am not, I should be the prototype family to support the CBFR rate structure, whether we end up going with the Woodland-Davis project or not.

Interestingly enough, despite latching himself and his campaign to the work of Davis Enterprise columnist Bob Dunning, Michael Harrington is punting on the issue of the rate structure: “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.”

The problem with that view is that the courts are not going to be able to select or design a more effective rate system than the experts, rate consultants and WAC members were able to construct.

Michael Harrington’s dilemma here is that he knows, on the one hand, that he is getting a lot of mileage through Bob Dunning’s misguidance on CBFR.  But on the other hand, he knows, intellectually, that CBFR offers the fairest rate structure to most of the ratepayers.

The problem and confusion with CBFR begins with fundamental misconceptions about the structure of costs for how to deliver water through the system to someone’s tap.

A week or two ago, I found a book I was looking for on Amazon.  It was $1.99.  But by the time I paid for tax and delivery charges the costs was nearly $7 – still a good cost, but not as cheap as it would have been had I been able to find it used in town.

In other words, I had to pay a higher price for delivery than the product itself.

The water system is much the same way.  You have to pay for the rate of the water itself but you also have to pay for the infrastructure and that infrastructure is there, regardless of how much you use.

Right now our system approximates that fixed charge by meter size and meter size alone.  That method produces an inequity.  People who use less water end up paying a lot more per gallon than people who use more water.  Those low-end users are actually subsidizing the infrastructure costs for the high-end users.

CBFR changes the equation.  It attempts to create a fixed rate system that more closely approximates the actual contribution.  It does this by using summer water usage, which creates the need for peak capacity, as a proxy measure for tax on the system.

A proxy measure is a tool that statisticians, methodologists, and other researchers use when a better measure is not available.  So while we may not be able to directly measure what each water user’s contribution is to the fixed costs of the system, by generating a peak usage component, we are able to approximate it.

The result of the measure is that we end up smoothing out the rate structure from low end to high usage.  In five years under the existing system we would be looking at low-end users paying $12 per ccf compared to $4.94 for the high-end users.  We smooth that out under CBFR to $8 compared to $5.82.

The high-end users are still paying less per gallon than their low-end counterparts, but instead of 2.5 to 1, now it’s about a 25% advantage.

Some have suggested oddly that this represents a punishment, but far from the case – what this represents is the equalizing of a present inequity.

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.

Everyone is going to have to take a hit regardless of whether we go to surface water or remain with groundwater.  The question is whether we want to continue to shift the burden to the lower-end users or whether it is more appropriate to make the higher users, who will still be advantaged, take up more of their fair share.

The next problem, however, is that Bob Dunning erroneously interprets the CBFR as a variable rate, which he calls a supply charge.

In his column on Sunday he writes, “Pinkerton ends his memo to council members and staff by claiming the supply charge ‘is not a variable charge.’ He then tries to solidify the claim by saying ‘The variable charge is the only charge that is based on actual consumption of water.’ “

Writes Mr. Dunning, “The supply charge is based strictly and solely on your actual consumption of water from May through October.”

In effect, what Mr. Dunning writes is accurate.  The part that he seems missing is that, while the CBFR is based on consumption, hence the name consumption based, it is actually trying to measure something that is more fixed – the impact on infrastructure.

His focus on the variable component to this leads him to the conclusion, “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.”

He writes, “You do the math and that comes up to nearly six times as much for summer water as winter water.”

But, as Richard McCann notes, “Bob Dunning disputed that the cost of providing the capacity to deliver water in the summer can’t be six (it’s actually five) times the variable costs (e.g., energy, etc.) of delivery. Yet he provides no evidence to the contrary.”

Mr. McCann, a longtime consultant on water and utility issues, argues, “I’m not surprised by the 5-to-1 cost ratio. The largest portion of the costs is in the fixed construction costs to build the capacity that you need to water your lawn during the summer. Those costs don’t vary with how much you change your usage during the winter months. Our system peak usage is in the summer and we all share in that responsibility.”

He continues, “The beauty of the consumption-based fixed rate model is that you can avoid a portion of that charge by conserving during the summer. You are not doomed to pay a fixed portion regardless of usage, which would be the traditional way of collecting the fixed capital costs for a new water supply. You now have control over your bill.”

It is a complicated issue.  As a writer to the Enterprise pointed out, “I am voting no on Measure I, not because the project is unnecessary, not because better alternatives are available to meet the need, but because the proposed rate structure unfairly punishes summer water use rather than simply recovering the cost of the project.”

The problem with their view is that summer water users are not punished under this system.  The distribution of charges was so far out of whack that any effort to fix that inequity starts to look like punishment.  That is why it is so important to continue to look at the bottom line and the ratio of low end to high end per unit costs.

Yes, we could go to a different rate structure that continues the practice of using meter sizes as the proxy for infrastructure costs, but that is far more unfair than CBFR, to probably 70% of rate users.

—David M. Greenwald reporting

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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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129 thoughts on “Commentary: Addressing Misconceptions About CBFR”

  1. Ryan Kelly

    I do much better with the new system and feel it is much better than the way we’ve been setting the rates. My rates are affordable and make sense to me. I am a low water user. Any rate system that would have me paying more and larger consumers paying less would seem unfair to me.

  2. SouthofDavis

    David wrote:

    > A week or two ago, I found a book I was looking
    > for on Amazon. It was $1.99. But by the time
    > I paid for tax and delivery charges the costs
    > was nearly $7

    David forgets to mention that if Amazon had a pricing structure like the CBFR if he bought a lot of books last summer he would be paying more for his books this winter…

    No one has mentioned that the big apartment owners in town are supporters of the base water rates set by summer use since most big apartments are about half empty in the summer and are using far less water than when school is in session and the apartments are full.

    So we now have the city getting water for free, the city not paying for sewer and big apartments paying less than their fair share. I’m sure I’m missing more politically connected people that are getting cheaper water than they deserve…

  3. medwoman

    Ryan

    Like you, and according to David’s calculations, 70 % of us, I will also do better under the CBFR.
    As for the classist argument I see this from a different perspective. What I wonder is why I should, as a low water user, continue to subsidize water capacity for those who through their life choices, more children, larger lawns for said little ones to play on, or for their aesthetic value, or because they like to grow their own food.
    Should we not all pay for our own use ( and delivery costs) of the water we choose to use ?

    Now actually, I don’t wonder or care about that at all. But that is because I apparently am one of the lucky
    “elites” being spoken of and the change in cost will not affect me significantly. But I certainly would be entitled to ask that question if I were an elder on a low fixed income, or if I had deliberately chosen to have a very small family knowing that was all I could afford or if a devastating health condition had unexpectedly depleted my resources leaving me in a weakened economic circumstance.

  4. rusty49

    SOD
    “No one has mentioned that the big apartment owners in town are supporters of the base water rates set by summer use since most big apartments are about half empty in the summer and are using far less water than when school is in session and the apartments are full.”

    Great point !

  5. rusty49

    Medwoman:
    “As for the classist argument I see this from a different perspective. What I wonder is why I should, as a low water user, continue to subsidize water capacity for those who through their life choices, more children, larger lawns for said little ones to play on, or for their aesthetic value, or because they like to grow their own food.
    Should we not all pay for our own use ( and delivery costs) of the water we choose to use ?”

    I agree Medwoman. Then you should also agree that why should I as a taxpayer sudsidize those who bought more of a house than they could afford, chose not to go to school in order to get a good paying job, choose not to work and suck off welfare…

    I mean for many that’s their life choices, why should I be panalized?

  6. Michael Harrington

    SouthofDavis: you should have seen all of the business and rental property owners down in force at the January 15, 2013 CC meeting where Brett Lee and friends eliminated the conservative, fiscally responsible pay-go, pushing back much of the rate increase, and hugely jacking up the total financing costs.

    After the meeting, Brett went out to the hallway, and the rental property owners were especially fawning on him.

    What Brett did not realize is that his leadership on the radical change that night caused a huge cost dump onto homeowners. The Chamber GRC people sure knew it, but Lee probably did not. He was just trying to please politically powerful people in the room.

    Heck, I have tracked these rates for at least 18 months, and sitting in the audience, I did not realize what the CC was doing in terms of saving large businesses from paying their fair share of summer peak use. I knew the CC was manipulating the rates in order to increase the chance of Measure I passing, but the summer water subsidy to large business users went past me.

    SouthofDavis, your post is spot on.

  7. SouthofDavis

    Michael wrote:

    > SouthofDavis: you should have seen all of the business
    > and rental property owners down in force at the January
    > 15, 2013 CC meeting where Brett Lee and friends eliminated
    > the conservative, fiscally responsible pay-go, pushing
    > back much of the rate increase, and hugely jacking up
    > the total financing costs.

    Michael just reminded me that it is not “only” big apartment owners that like the plan of setting rates by summer water usage. Anyone who has lived in town for even a few summers knows that just about every business in town uses less water in the summer when so many UCD students are not in town.

  8. JustSaying

    “No one has mentioned that the big apartment owners in town are supporters of the base water rates set by summer use since most big apartments are about half empty in the summer….”

    Actually, David just implied the opposite in a recent report about how Chamber of Commerce members are urging “no” votes on the project in the face of the Chamber’s own “yes” stand, using a “big apartment owner’s” letter about high rates as his only evidence. Which “big apartment owners” are you quoting?

  9. Edgar Wai

    [ 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])

  10. Edgar Wai

    [ Why the ‘mortgage’ analogy associated with CBFR is misleading ] ([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-176836[/url])

  11. JustSaying

    “What Brett did not realize…The Chamber GRC people sure knew it, but Lee probably did not. He was just trying to please politically powerful people in the room.”

    If you were an elected councilman, would you rather have Michael call you: 1.) corrupt, 2.) stupid, 3.) vain or 4.) all the above?

  12. Robb Davis

    This quote:

    [quote]The result of the measure is that we end up smoothing out the rate structure from low end to high usage. In five years under the existing system we would be looking at low-end users paying $12 per ccf compared to $4.94 for the high-end users. We smooth that out under CBFR to $8 compared to $5.82.[/quote]

    is what makes me so confused about Mr Dunning’s (and others’) opposition to CBFR. If I am understanding this correctly, then those using the most water in this town are paying over $2.00 less per CCF than those using the least. Have I got this right? If so, how can a high user claim that CBFR is not only unfair, but unfair to him/her?

    I apologize if I am missing something here and would invite someone to correct me (I mean this sincerely because I am afraid I am misunderstanding something).

  13. Edgar Wai

    Re: Robb

    In the argument presented, people are only comparing CBFR against rate structures inferior to CBFR in some aspects. CBFR is not compared against a rubric of fairness. The result is that CBFR fixes some unfairness and leave other areas more unfair.

    The arguments that CBFR is “fair” are biased. They only analyze the relative goods of CBFR and ignore the new bad that it introduces.

  14. Frankly

    [i]I agree Medwoman. Then you should also agree that why should I as a taxpayer sudsidize those who bought more of a house than they could afford, chose not to go to school in order to get a good paying job, choose not to work and suck off welfare…

    I mean for many that’s their life choices, why should I be panalized[/i]

    Great points Rusty49.

    Now I expect a great level of nuance will come to try and explain this away, or we will hear the sound of no response. You see, there are some life-choices that are allowed in the rules of victim-ology and political-correctness. And then there are those that are routinely demonized. Apparently by medwoman’s perspective, if you make a life choice to have many children and have a lawn and garden, you deserve to pay more for water. But I have read what she has written before, and it is clear that she would not make the same case for food or healthcare or, ??? Especially health care… she thinks everyone is entitled to as much healthcare as they need despite their life choices. But apparently it would be fine for her if those same people could not afford their own healthcare or food because the CBFR plan caused their water rates to increase by a factor of five or more, to help subsidize all those people that live a proud low-water lifestyle like medwoman.

    It is refreshing really because despite all the posturing of being better people for all their demands of state-sponsored altruism, many liberals demonstrate that robust and common human characteristic of just defending their own self-interests as their first priority. Rand had it right.

    And let’s get this straight… it will be the high-water users subsidizing medwoman and others.

    On the issue of fairness, since we need a new water system, and change to the distribution of costs to pay for that water system means that someone will be subsidizing someone else. It is irrelevant how much unfairness some want to claim about the current rate system. All those people now claiming unfairness never organized to take the previous rate structure issue to the city. Now we have this big expense, and all of a sudden we are all told to look backwards at the unfairness as justification for a new rate system that punishes one class of family or business over another. It is just a convenient way to pick winners and losers based on some lifestyle-class definition.

    CBRF punishes:
    -Water wasters. But then how many true water wasters do we have, and is a rate without a seasonality factor or tiers enough to encourage conservation?
    -Large families
    -Families with lawns
    -Families with gardens
    -Businesses that use more water in the summer
    I fail to see the justification for sticking these groups with a much higher water bill, so folks like medwoman get a smaller water bill. In my opinion, medwoman would not be paying her fair share as a resident of a city that MUST invest in a new water system. The new system costs more, and everyone should pay their fair share for the increased cost.

  15. Robb Davis

    Ryan, Edgar and Frankly — I am not trying to be obtuse but, is it true that under the CBFR the cost per ccf is lower for the highest decile than for the lowest decile users? That is my question. I understand your point Ryan and yours Edgar. My question is really more mundane. Given the projected revenue needs, IF CBFR is used do the highest users pay less per ccf than the lowest users? That is all I want to be sure of–not how CBFR compares to another system (the old one or a more “just” one). This is an internal comparison.

    Thanks

  16. JustSaying

    “Interestingly enough, despite latching himself and his campaign to the work of Davis Enterprise columnist Bob Dunning, Michael Harrington is punting on the issue of the rate structure: ‘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….'”

    No true that Michael is punting on rates. He’s using them to charge down the field toward his “no” goal. That’s what his lawsuit is all about, confuse, conflate and contort the issues. How can you believe what he says let alone quote him, David, when his own Vanguard postings conflict (including “not taking any detailed positions on the rates)?

  17. Edgar Wai

    Re: Frankly

    I think your choice of word “Punish” is incorrect. But I agree that CBFR can only overcharge these groups:

    -Water wasters
    -Large families
    -Families with lawns
    -Families with gardens
    -Businesses that use more water in the summer

    The reason is in the inherent design of the rates. In addition, CBFR pits the users against one another in a competition for no reason. In a true mortgage when your neighbor vacates, your mortgage would not increase because of that. But that is part of the implementation of CBFR.

    * * *
    [quote]I understand your point Ryan and yours Edgar. My question is really more mundane. Given the projected revenue needs, IF CBFR is used do the highest users pay less per ccf than the lowest users? [/quote]

    CBFR does not have the stability for me to answer that question. Whether you end up saving anything depends on the use pattern, and how much your neighbor saves. In CBFR, the Supply Charge is in a competition between you and other users.

    If you are a user who uses more water in the winter, you pay less per ccf than the lowest user who uses more water in the summer.

    There is no simple Yes or No answer because CBFR introduces new instabilities that makes the result not uniform. If you want a simple Yes or No answer, you will also have to ignore the instabilities that CBFR creates.

  18. Michael Harrington

    Just Saying: “names, please” The ones who were there know whom I wrote about. But I can say this: I was taken by surprise by what I saw. If I had had my phone out of my pocket, and caught it, I would certainly post it.

    It was actually a sad sight to see, but extremely revealing for all concerned.

    The group was celebrating with their CC champions for just screwing Davis homeowners as a unified block, especially ones with nice gardens, grass for kids to play on, and larger families.

    Vote No on I.

  19. Robb Davis

    Okay Edgar – I see your point but we also know that peak water use is in the summer so I am not sure the approach is as unstable as you indicate. We actually know a fair bit about water usage. My question to you and everyone was to make sure I understood the quote from David’s article today. You are essentially saying that David has no basis for making this claim:

    [quote]The result of the measure is that we end up smoothing out the rate structure from low end to high usage. In five years under the existing system we would be looking at low-end users paying $12 per ccf compared to $4.94 for the high-end users. We smooth that out under CBFR to $8 compared to $5.82.[/quote]

  20. Matt Williams

    SouthofDavis said . . .

    [i]”No one has mentioned that the big apartment owners in town are supporters of the base water rates set by summer use since most big apartments are about half empty in the summer and are using far less water than when school is in session and the apartments are full.

    So we now have the city getting water for free, the city not paying for sewer and big apartments paying less than their fair share. I’m sure I’m missing more politically connected people that are getting cheaper water than they deserve…”[/i]

    Everything that SouthofDavis says above is 100% wrong. 100%.

    First, the apartment owners are paying for absolutely every single drop of water that they consume. There is not a single drop of water that they do not pay for.

    Second, the summer period as defined in the Davis implementation of CBFR is May through October, lets look at the apartment usage history for the six billing periods 139,020 ccf in Jan/Feb, 157,116 in Mar/Apr, 189,759 in May/Jun, 199,574 in Jul/Aug, 176,554 in Sep/Oct, and 128,440 in Nov/Dec. That shows a very clear pattern of summer peaking just like the rest of Davis. Add in the fact that many apartments have irrigation meters that add another 1,699 ccf in Jan/Feb, 6,242 in Mar/Apr, 21,456 in May/Jun, 26,905 in Jul/Aug, 17,544 in Sep/Oct, and 4,043 in Nov/Dec.

    The irrigation numbers above show incredibly clearly that the water system has to be built with at least 27,000 ccf of bi-monthly capacity in order to reliably deliver water to apartment landscapes. Under CBFR the apartment owners have to take responsibility for the construction costs associated with that 27,000 ccf and pay the monthly mortgage for it.

    Similarly the water system has to be built with at least 200,000 ccf of bi-monthly capacity in order to reliably deliver water to its apartment dwellers. Under CBFR the apartment owners have to take responsibility for the construction costs associated with that 200,000 ccf and pay the monthly mortgage for it.

    If 200,000 ccf of capacity is built into the system, then the off-peak usage of apartments is always covered. Building more capacity into the water system than 200,000 ccf would be a waste of resources for all of Davis. The WAC worked hard to downsize the SWP. By her post above Southof davis appears to be trying to countermand the WAC’s sizing decision and have us build a larger plant to service “phantom” apartment demand for water, just so the apartment owners can have a higher bill. That doesn’t make sense to me. Does it make sense to anyone else?

    Further, since the apartment owners pass on the costs of water to their tenants, what Southof Davis appears to be arguing for is building a larger plant to service “phantom” apartment demand for water, just so the tenants can have a higher rent bill. That also doesn’t make sense to me. Does it make sense to anyone else?

  21. Edgar Wai

    Re: Robb

    I am saying that for David to make that claim, he has to:
    1) Have the correct numbers
    2) Predict how people will use the water.
    3) Predict that no entity will not exploit the loopholes of CBFR.

    With this considerations, I think it is insufficient to evaluate CBFR based on “it seems better than what we have” but based on

    “Given that we know what is better than CBFR, why would we settle with CBFR and leave all these loopholes?”

  22. Matt Williams

    rusty49 said . . .

    [i]”Great point !” [/i]

    No rusty, it is an absolutely horrible point. Raise rents for tenants to pay for the construction of “phantom” system capacity that the tenants do not need.

    Horrible point.

  23. Robb Davis

    I wonder if Davisite2 (or Sue or anyone who has claimed we cannot trust the experts) would care to comment on Mr Harrington’s quote:

    [quote]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.[/quote]

    Who are these experts? Are they the ones that Sue says are out there but afraid to come forward and tell the truth because they fear retribution. Mr Harrington, can the judge compel Sue’s experts to testify? I hope so, so that we can finally get to the bottom of all the lies that the bought and paid “experts” have inundated us with during the campaign.

    It is good to know you have rate experts who will set us straight. You seem to be pretty sure they are out there. My question would be why have you not had them come forward and offer their expertise up until now? Would that not have saved us all a great deal of headache and a lawsuit? Why did you not ask the WAC to invite them to present to the WAC? Why did you not ask them to inform our CC? Since there are clearly experts out there why haven’t we, over the past year, been made aware of their expertise? This bothers me. What a waste of our time to not have benefitted from them.

  24. Matt Williams

    Michael Harrington said . . .

    [i]”What Brett did not realize is that his leadership on the radical change that night[b] caused a huge cost dump onto homeowners.[/b] The Chamber GRC people sure knew it, but Lee probably did not. He was just trying to please politically powerful people in the room. “[/i]

    No Michael it did not. Your bolded statement is 100% incorrect. 100%. The January 15th decision (which I disagree with by the way) simply reduced the total 2018 bill from $29 million to between $24 million and $25 million. Each and every customer in the system benefits from that $4 million to $5 million reduction in the total 2018 bill proportionally. Not one single customer is advantaged and not one single customer is disadvantaged. All the rates came down 16%.

  25. Matt Williams

    Michael Harrington said . . .

    [i]”SouthofDavis, your post is spot on.”[/i]

    No Michael. SouthofDavis’ post is spot off. You and rusty and SouthofDavis need to take a remedial reading course from Joe Friday. 8>)

  26. Robb Davis

    Edgar – Maybe you have already elaborated on this but as to your third point: what are the loopholes that could be exploited? Also, my point is that I think we know pretty much how people use water in this town. It simply takes more water to keep lawns green in the summer (many people simply turn off irrigation in the winter–as does the housing cooperative where I live). So, I think we pretty much know the answer to two. The issue then is whether the estimates David gives account for this. I assumed they did but wanted to find out. Thus my original question. Please say more about “loopholes” or point me to where you have written about this. Thanks

  27. Frankly

    [i]I think your choice of word “Punish” is incorrect. But I agree that CBFR can only overcharge these groups[/i]

    Edgar – I use the word “punish” because the rationale for the CBFR rate differential has been explained as being justified by the fact that these rate-payers have been subsidized by the other rate-payers. I think there is a bit of “punishment” in the motivation of those suppporting CBFR.

    However, I agree that the word “overcharge” is less emotive.

  28. Matt Williams

    Frankly said . . .

    [i]”CBRF punishes:
    -Water wasters. But then how many true water wasters do we have, and is a rate without a seasonality factor or tiers enough to encourage conservation?
    -Large families
    -Families with lawns
    -Families with gardens
    -Businesses that use more water in the summer
    I fail to see the justification for sticking these groups with a much higher water bill, so folks like medwoman get a smaller water bill. In my opinion, medwoman would not be paying her fair share as a resident of a city that MUST invest in a new water system. The new system costs more, and everyone should pay their fair share for the increased cost.”[/i]

    A traditional rate structure punishes:
    – little old ladies on respirators
    – seniors on fixed incomes and have cut back their usage to make ends meet
    – people who have lost their jobs and have cut back their usage to make ends meet
    – people who have low paying jobs and have cut back their usage to make ends meet
    – people who have recognized that water is a precious resource and have cut back their usage to make ends meet
    – all apartment dwellers
    – all condominiums
    – all businesses that have no outdoor watering requirement
    I fail to see the justification for sticking these groups with a much higher water bill, so folks who have made discretionary life decisoons get a smaller water bill. In my opinion, virtually everyone in El Macero would not be paying his/her fair share as a resident of a city that MUST invest in a new water system. The new system costs more, and everyone should pay their fair share for the increased cost. Why give the water wasters a free ride?

  29. Edgar Wai

    Sorry, Frankly. Your choice of word “punish” was accurate.

    CBFR punishes users who are already efficient when the rates begin:

    [b]Year 1[/b]
    o Winter: A:20 B:20
    o Summer: A:40 B:60 (B is inefficient and wasting 20)
    CBFR: A:40% B:60%

    [b]Year 2[/b]
    o Winter: A:20 B:20
    o Summer: A:40 B:40 (Excess=20)
    CBFR: A:50% B:50%

    CBFR punishes A for no reason. B’s conservation after the CBFR begins is subsidized by A, who is alredy efficient.

    * * *
    I am out for the day and cannot answer questions.

  30. Matt Williams

    Robb Davis said . . .

    [i]”Ryan, Edgar and Frankly — I am not trying to be obtuse but, is it true that under the CBFR the cost per ccf is lower for the highest decile than for the lowest decile users? That is my question. I understand your point Ryan and yours Edgar. My question is really more mundane. Given the projected revenue needs, IF CBFR is used do the highest users pay less per ccf than the lowest users? That is all I want to be sure of–not how CBFR compares to another system (the old one or a more “just” one). This is an internal comparison.

    Thanks”[/i]

    Yes Robb that is true in all rate structures that have a fixed fee component and a variable fee component. If you spread a $100 fixed fee over 1 ccf of consumption the extrapolates cost per ccf is $100. If you spread that $100 fixed fee over 100 ccf of consumption the extrapolates cost per ccf is $1.00. If you spread that $100 fixed fee over 1,000 ccf of consumption the extrapolates cost per ccf is $0.10.

  31. Michael Harrington

    Robb Davis: The CC was hell-bent on jumping on the Woodland train, and they did not slow a second for outsider opinions. As Sue wrote in the DE SUnday Edition, that is a train we should be glad to miss.

    The burden is on the city to show their rates meet Prop 218. They will fail, miserably, is my prediction. I am not wasting my time on the legal case. If I had dragged outside experts into the rates mess, it would not have done any good. So I filed the case, and there is an organized, judicial process to sort this out. At the end, we should have a very nice, lawful, and fair rate system to fund whatever system the City is going to use.

    I’m moving on to the sewer rates. My sources tell me that the City does not pay its fair share, or any share, for city use of the sewer system. Same problem as the water system. The City has to be treated the same as any other class of user.

    Also, I think the sewer rate “look back” feature violates Prop 218.

    The Yolo Ratepayers will look into this problem.

  32. SouthofDavis

    Matt wrote:

    > Everything that SouthofDavis says above is 100% wrong. 100%.

    but Michael says:

    > SouthofDavis, your post is spot on.

    I’m wondering if Matt will go on record to say:

    1. That in Davis many apartments do not have lower occupancy and water use in the summer and

    2. Lower summer water use will not result in lower rates for the rest of the year?

    I’ve never met Michael or Matt and I don’t have any stong feelings about river vs. well water (like Don) but it bothers me that we have a super complex rate structure (and proposed rate structures)that people like Matt try and defend.

  33. Don Shor

    Apartment complexes continue to irrigate their landscapes during the summer, and landscape watering is a very high percentage of water use in any residential situation. If they’re watering correctly (yeah…) they will be watering the landscape more during June – September than they will during the rest of the year. How much that balances the reduced water use due to reduced occupancy is anyone’s guess. Maybe somebody could ask an apartment owner for a comparison of water bills.

  34. Don Shor

    I love the idea that one of our Yolo County judges is going to set water and sewer rates for us, based on the expert testimony before them. Excellent plan. We all know that our Yolo County judges have expertise in these matters. 😉

  35. Ryan Kelly

    As a low water user, I will do better on the CFRB rate schedule than the one that Mike Harrington urges and has been traditionally used. I suspect that if the rates were truly fair then my cost would be even lower and homeowners with higher use would have even higher rates.

    Mike Harrington may want us to believe that his idea of fair rates means lower rates for all, but mathematically this can’t happen. I believe that he is out of control, and count on the Court to protect us from his frivolous legal maneuverings. Mike H. doesn’t understand the damage that he is causing to the community. We have a democratic process and we have elected and appointed people to help us work through this and come to an agreement. Now we get to vote. Mike needs to see that he can’t control or change that.

  36. JustSaying

    SoD, I still don’t understand why basing rates on summer use only instead of on a 12-month period is necessary. However, are you contending that winter apartment toilets, showers, etc. are guaranteed to use much more water than apartment house summer irrigation, fewer toilets, showers, etc.?

    How many accounts really would have their peak water use during the months that are not being measured for this factor? And how significant are the differences for such accounts?

    If the purpose to determine each water account’s peak need for the following year and allocate the system costs appropriately, doesn’t that seem reasonable? How much of the subsequent water bill is affected by this part of the equation?

  37. David M. Greenwald

    “David forgets to mention that if Amazon had a pricing structure like the CBFR if he bought a lot of books last summer he would be paying more for his books this winter…”

    SOD: This is actually a rather sizable error on your part. The difference between the book example and the water example is that we need to create a proxy measure to estimate the impact on the water system while in the book delivery model, we have a direct measure. In other words, we don’t need to charge me for past purchases when we know the exact cost of delivery for all present purchases.

  38. JustSaying

    “How much that balances the reduced water use due to reduced occupancy is anyone’s guess. Maybe somebody could ask an apartment owner for a comparison of water bills.”

    Don, thanks for answering at least one of my questions before I got it posted. With respect to your question, I’d hope that the city and the committee already have real data that they’ve considered in getting us this far.

  39. David M. Greenwald

    [quote]CBRF punishes:
    -Water wasters. But then how many true water wasters do we have, and is a rate without a seasonality factor or tiers enough to encourage conservation?
    -Large families
    -Families with lawns
    -Families with gardens
    -Businesses that use more water in the summer[/quote]

    Wrong Frankly. if you look at the graphs – they aren’t punished, they are advantaged presently and will be asked to pay a more equitable share of their usage (but still remain advantaged). You need to pick a different word.

  40. David M. Greenwald

    ” How can you believe what he says let alone quote him, David, when his own Vanguard postings conflict (including “not taking any detailed positions on the rates)?”

    I think if you read the entire piece, that question becomes pretty clear. I didn’t introduce the point for the truth of the statement, but rather as a strawman I could play off on the rate discussion.

  41. JustSaying

    Gawd, David, why are you trying to complicate life so much? But, thank you for allowing me a meaningless strawman victory.

    New questions now that Michael’s sources supposedly have given him city sewer secrets:

    1. Do the same state laws cover sewer rates as water rates?

    2. Are water use levels used as proxies for sewer charges here?

    3. Will SewerGate provide as much impact on the “no” vote as Michael’s lawsuit allegations seem to have?

  42. Frankly

    [i]I fail to see the justification for sticking these groups with a much higher water bill, so folks who have made discretionary life decisions get a smaller water bill[/i]

    Matt – I think the difference in opinion boils down to a perspective of cause and shared ownership. Lastly, it is impacted by my assessment of the benefits derived. For this last point, we have a large percentage of the population benefiting from a better product that costs more to produce, yet they are paying the same or less for it.

    And, when I consider that we REQUIRE a new waterworks system – whether it is a surface water project or Sue and Mike go out and cheerlead drilling more deep wells – it should be required that all residents share equitably in the costs for that new system. Now is not the times to fiddle with the rate structure because it places a larger cost share burden on a few to subsidize many.

    Lastly, all residents have a single vote… a single voice. And all residents will have an equal share of leased ownership of the new system.

    They share the reason for the new system.

    They share the benefits of the new system.

    They share the ownership of the new system.

    They should share in the costs of the new system as per the standards already set.

    Moving the rate needle at this point is unfair in that it economically punishes certain lifestyles over others.

    Think of two families living in a duplex. One is one-bedroom and one-bath and is occupied by a childless couple that eats out most nights. The other side a four bedroom two-bath unit with a family having five children a lawn in the back for the kids to play on, trees that provide shade and a garden to grow vegetables in. The landlord has to do a bunch of structural repairs and cosmetic improvements on the building, and he jacks up the rent on the family five times what it was, while keeping the other rent the same. The landlord justifies the difference saying that the larger family was charged an unfair rent before.

    At the very least I would think you could agree that the rental rate change is bad timing.

  43. dlemongello

    We don’t need to guess about the summer apartment water use, Matt was on top of it as usual and had the NUMBERS at his disposal and posted them above. So we all can see that this assertion about apartment non-peak period use being less is, false. The numbers and only the numbers have answered that question.

    Robb,
    For any realistic situation, what has been posted here is correct, CBFR will still result in higher users paying less per gallon because of fixed costs, of which there are 2. Though the supply charge is based on consumption it is still a fixed cost (for the following year), something many have a very hard time grasping. What Edgar posts are hypothetical VERY unrealistic situations and then says CBFR is unfair in some (those) situations. He has gone on about it ad nauseum at this point and yet Matt has continued to respond to him politely. The simple answer to your question is YES, except in the weirdest most unlikely unrealistic situations imaginable.

  44. dlemongello

    Matt, there is one type of user you left out in your list, the one who conserves and always has, because of philosophy and conviction.

    Frankly, it is not retroactive and therefore not a punishment to make the future rates more equitable. And if it all goes as proposed you still have 2 more years of gravy.

  45. Michael Harrington

    Too bad the bond consultants, water staff, and the CC put Matt and Frank’s innovative rate system through the political mauling that resulted in an easy legal and political target.

    In the end, we will have a great rate system that will put Davis on the water agency map.

    But the CC is incapable of dealing with this, so we filed the rate case to get some neutral judicial assistance reaching a system that complies with law.

    It was shocking to me to see the Davis CC adopt the two year BWA system. There is a lot of expert testimony in the WAC and CC record that the BWA system grossly violates Prop 218. This is why David Greenwald went crazy when Dan Wolk forced the issue back to the WAC for another vote for “anything but CBFR.”

    But … because of the CBFR look back, the CC politically could not immediately adopt it, so they used the BWA two year transition.

    This was an intentional implementation of an illegal rate system, and the CC and staff knew it. The Court case will show that.

    The CC did it because their were desperate to jump on the Woodland train, so they voted 5/0 to violate Prop 218.

  46. Robb Davis

    Michael Harrington wrote:

    [quote]If I had dragged outside experts into the rates mess, it would not have done any good. So I filed the case, and there is an organized, judicial process to sort this out. [/quote]

    This, and some of the things davisite2 wrote the other day about not trusting “experts” or elected officials (if they have aspirations for higher office) makes it pretty clear to me where we are in terms of public debate in this town. There is a group of citizens (who happen to be coalescing around “No on I” just now) who fundamentally distrust the governance system we have. They distrust elected officials unless by some means they can discern that these officials have no aspirations to serve beyond Davis (and are not connected to business interests, developers or others who they deem “undesirable”). They distrust “experts” (apparently of all kinds) who they believe advance recommendations (cynically) for narrow personal financial gain.

    You believe Michael that your direct democracy initiative will solve this fundamental problem of distrust but you are wrong. Without trust in fellow citizens to work towards the common good NO system will work. I am not saying that we should blindly trust anyone. That is one reason why I value the work of the Vanguard. However, your actions (and your inaction on bringing in experts who could have informed the discussion) have, in my view, had a chilling effect on public discourse and act to lessen the trust we need to move forward on complex issues. You can say “You will thank me Robb in the end”, but I have already seen the “end” and it is a brittle, more divided community, less able to engage in honest debate and dialogue and full of backbiting, innuendo and distrust. That “end” makes all other “gains” very shallow victories indeed.

  47. Michael Harrington

    I am proud of our citizen volunteers, such as Matt and Frank who worked thousands of hours to design their rate system and put it out for public inspection and consiration. Their analysis showed that the current system, the BWA tier and other features all grossly violate Prop 218, and Frank and Matt tried to offer a solution, in the best of the Davis volunteer tradition.

    However, the City warped it around, and the end result is not cutting it. I agree with Dunning’s criticisms.

    That said, this does not mean that their CBFR system cannot be modified to conform to Prop 218, and be fair. We shall see what the experts and Court comes up with.

    But what you see adopted by the CC on January 15 will most likely never be legally final.

    So debate away here, but the end product is going to look different.

  48. Frankly

    With respect to trust, I was thinking about two very involved citizens and their approaches for influencing public opinion: Matt and Mike.

    Mike does his own thing, and there is value in strong oposition in that it causes both sides to have to work harder to develop better solutions. However, Mike’s approach is sort of sitting in a tower throwing bombs, and Matt is down on the town square debating directly and respectfully with each and every citizen.

    If I were handing out awards for the person I most trust with respect to his approach, Matt would be the easy choice. However, I am not ready to discount the value of Mike and his approach.

    And then there is the entertainment value…

  49. Ryan Kelly

    [quote]But … because of the CBFR look back, the CC politically could not immediately adopt it, so they used the BWA two year transition. [/quote]

    No, wrong.

    [quote]This was an intentional implementation of an illegal rate system, and the CC and staff knew it. [/quote]

    No, wrong again.

    [quote]The CC did it because their were desperate to jump on the Woodland train, so they voted 5/0 to violate Prop 218. [/quote]

    No, not what happened. This is a lie and wrong yet again.

  50. newshoundpm

    CBFR seems to make sense to me. It seems akin to looking at PM peak traffic flows for a project in determining its traffic impacts. You build a system to handle the peak needs. Those who contribute to the peak needs are also the same ones who contribute to the peak infrastructure sizing requirements. When you need water is as important if not more important than how much water you need. Take a look at cost or value of water rights. Summer water is much more valuable than winter water because supply is much greater and demand is much lower in the winter than in the summer. That’s also why it is much cheaper to see a move as a “matinee” than at the later peak viewing times. That’s what electricity is more expensive during the summer and during the afternoon than at other times of the day or days of the year. Why do we have such difficulty seeing the application of the common concept to our water rates? If folks are simply looking at this as whether their rates are higher or lower with CBFR versus another methodology for pricing, that doesn’t seem to be very intellectually honest in terms of comoing up with an equitable manner of pricing water service.

  51. Mark West

    Robb Davis: “[i]There is a group of citizens (who happen to be coalescing around “No on I” just now) who fundamentally distrust the governance system we have.[/i]”

    Robb, I don’t think it is just a matter of distrusting elected officials, experts and our governance system. This group fundamentally distrusts other people, especially those who do not share in their preconceived beliefs. They are not interested in honest debate as that would require consideration of ideas other than their own. Their interests reside exclusively inside the echo chamber of their own small clique, and as they already ‘know’ that they are right, their value proposition is to force their beliefs on everyone else.

    These folks represent the antithesis of a community working together to find solutions to real world problems, and as such, both they and their approach should be rejected without further consideration, until such time that they demonstrate a commitment to being honest partners in the community.

  52. SouthofDavis

    dlemongello wrote:

    > We don’t need to guess about the summer apartment
    > water use, Matt was on top of it as usual and had
    > the NUMBERS at his disposal and posted them above.

    He posted “some” NUMBERS, but didn’t tell us where he got the numbers (I will say I’m sorry if Matt can link to a spreadsheet with the month my month water use of every apartment in town that ties out to his numbers).

    A typical 20-40 unit apartment in town will not have a lot of landscaping and will have 2-5 valves on a timer set for 10 minutes every other day in the summer.

    A typical college student takes more than one shower a day and does a lot of laundry so even having one unit of kids home in the Bay Area for the summer will save more water than all the sprinklers.

    So we all can see that this assertion about apartment non-peak period use being less is, false. The numbers and only the numbers have answered that question.

    Anyone that drives down Covell often where you can see many big apartment parking lots knows that the lots are at best half full in the summer.

  53. Don Shor

    [i]A typical 20-40 unit apartment in town will not have a lot of landscaping and will have 2-5 valves on a timer set for 10 minutes every other day in the summer. [/i]

    Typical apartment units in town are not 20 – 40 units. They are a lot bigger.
    The watering regimen you describe is probably not accurate.
    I recently consulted on an apartment complex in South Davis. I think it was six acres and it has hundreds of units. There are large turf areas, every building is surrounded by shrubbery, there are landscaped common areas and a pool. We have thousands of students in town, and most of them live in large apartment complexes.

  54. Matt Williams

    SouthofDavis said . . .

    [i]”I’m wondering if Matt will go on record to say:

    1. That in Davis many apartments do not have lower occupancy and water use in the summer and

    2. Lower summer water use will not result in lower rates for the rest of the year?

    I’ve never met Michael or Matt and I don’t have any stong feelings about river vs. well water (like Don) but it bothers me that we have a super complex rate structure (and proposed rate structures) that people like Matt try and defend.”[/i]

    Yes Matt will go on record to say:

    1. That in Davis [u]most[/u] apartments do not have lower occupancy and water use in the summer. The following is one of the data points I use to support that statement. [i] “I can tell you that we don’t see a significant drop off in the summer. Our tenants sign year long leases and mostly don’t go home. The cost of school and lack of classes encourages students to go to summer school. Those that do go home sublease their apartments to the masses of summer school students who come to town and need a roof over their heads.”[/i]

    2. Lower summer water use will not change the rates you pay for the water you use for the rest of the year. From January 1 each year to December 31 that same year the cost per ccf of the water any and all customers use is the exact same rate . . . $0.86 per ccf in 2015, $1.02 in 2016, $1.12 in 2017 and $1.32 in 2018.

    SouthofDavis said . . .

    [i]”He posted “some” NUMBERS, but didn’t tell us where he got the numbers (I will say I’m sorry if Matt can link to a spreadsheet with the month my month water use of every apartment in town that ties out to his numbers).”[/i]

    No apologies necessary SoD. Yes I do have a spreadsheet with the actual 2011 meter reading information for each and every one of the 16,433 customers in the system. 14,736 are Single Family Residences, 519 are Multi-Family Residences, 714 are Commercial and 464 are Irrigation.

    I would be an arrogant fool if I were making all these very detailed assertions if I didn’t have the data to back it up. Some would say I am an arrogant fool regardless, and I take their counsel seriously.

  55. Matt Williams

    SouthofDavis said . . .

    [i]”Anyone that drives down Covell often where you can see many big apartment parking lots knows that the lots are at best half full in the summer.”[/i]

    I am told that the reason for that is that the students who come to summer school have only one thing on their minds . . . studying. The normal quotient of social life that is experienced in Davis during the regular school year is at a much higher level than during summer school. The typical Monday through Friday week is “Eat, Go to Class, Eat, Go to Class, Study, Eat, Study, Sleep, Eat, Go to Class, Eat, Go to Class, Study, Eat, Study, Sleep, Eat, Go to Class, Eat, Go to Class, Study, Eat, Study, Sleep, Eat, Go to Class, Eat, Go to Class, Study, Eat, Study, Sleep, Eat, Go to Class, Eat, Go to Class, Study, Eat, Study, Sleep”

  56. SouthofDavis

    Don wrote:

    > Typical apartment units in town are not 20 – 40 units.
    > They are a lot bigger.

    Are you going to give me the number of units in the average sized Davis apartment building? FYI the average size building in the UCD housing study (that is not sent to real small apartments) last year was 69 units.

    > The watering regimen you describe is probably not accurate,
    > and certainly wouldn’t be healthy or effective.

    That is based on an actual 20-40 unit Davis apartment watering regimen (Orbit timer with a mix of Orbit and Rain Bird sprinkler heads) that seems to keep the grass and plants alive and looking good
    year after year…

    > I recently consulted on an apartment complex in
    > South Davis. I think it was six acres and it has
    > hundreds of units. There are large turf areas,
    > every building is surrounded by shrubbery, there
    > are landscaped common areas and a pool. We have
    > thousands of students in town, and most of them
    > live in large apartment complexes.

    Are you trying to say that a six acre apartment with 200+ units is “typical”?

    Take a walk from where you work to Downtown or the other way to the Davis Manor shopping center counting apartment buildings (you will see a lot of them, and I don’t think any will be over 200 units)…

  57. dlemongello

    Being arrogant about DATA/FACTS is the best kind of arrogant someone can be. I’ve been charged as that I’m sure and I have tried to learn to present it more softly, but it does not come naturally to me and you’re doing just fine as far as I’m concerned.

    That said, #2 at 12:53 pm above is what confuses people, if I may be so bold. The variable rate (what Matt quotes in $$) does not change and the consumption based fixed rate from the previous peak period does not change for the current year, but it does change the CBFR for the next year if you use less this year.

  58. Matt Williams

    Frankly said . . .

    [i]They should share in the costs of the new system as [u][b]per the standards already set.[/b][/u]”[/i]

    Frank, to that argument I have only three words to share . . . [url =”http://en.wikipedia.org/wiki/Loving_v._Virginia]Loving vs. Virginia[/url]

    “The standards already set” was the central argument that the State of Virginia used before the Supreme Court. Whose argument do you agree with? Virginia ‘s or Mr. and Mrs. Loving’s?

  59. Michael Harrington

    Frankly: My job is to stir things up, and play the other side, as rusty49 aptly noted the other day. When necessary, I use legal mechanisims to do what the bully pulpit cannot du. I used the Fall 2011 referendum to stop the CC and their project until further analysis. I used Prop 218 in the recent case to set up a process where the rates could get a neutral forum for resolution. But I always have time to poke the cobra basket when it deserves it.

    Dunning entertains, but with deadly seriousness as needed. He is right on the rates mess.

    Matt grinds spreadsheets and puts up Powerpoints.

    Mark West and Ryan Kelly and ERM and Medwomen complain, but not much else.

    The world needs all of us.

  60. Matt Williams

    SouthofDavis said . . .

    [i]”So we all can see that this assertion about apartment non-peak period use being less is, false. The numbers and only the numbers have answered that question.” [/i]

    Southof Davis, those anecdotal numbers about an individual theoretical apartment are not borne out by the actual 2011 consumption history numbers.

    The apartment usage history for the six billing periods 139,020 ccf in Jan/Feb, 157,116 in Mar/Apr, 189,759 in May/Jun, 199,574 in Jul/Aug, 176,554 in Sep/Oct, and 128,440 in Nov/Dec. That shows a very clear pattern of summer peaking just like the rest of Davis. Add in the fact that many apartments have irrigation meters that add another 1,699 ccf in Jan/Feb, 6,242 in Mar/Apr, 21,456 in May/Jun, 26,905 in Jul/Aug, 17,544 in Sep/Oct, and 4,043 in Nov/Dec.

    Is 139,020 greater than 199,574? Is 128,440 greater than 199,574? Is 1,699 greater than 26,905?

    The actual aggregate numbers speak for themselves.

  61. Michael Harrington

    BTW, I am defintely serious that I have zero intent to run for public office at this time. Why would I want to do that? Sit there and listen to hours of testimony at 11 pm about where to place a stop sign?

    In the time I put into the 2011 water rate referendum, I and a few friends saved local ratepayers over $135 million precious dollars.

    And we forced the CC back so the DJUSD had time to run a couple of parcel taxes so the schools had enough money to survive.

    The city water rocket scientists had mandated the first rate hike (Sept 2011 CC meeting) to come out in bills that were due just before the DJUSD’s parcel tax ballot. Amazing.

    I could run for CC, and maybe win, and sit up there for 4 years, and not accomplish 1% of what we have done with the water project, to date.

  62. Matt Williams

    Frankly said . . .

    [i]”Think of two families living in a duplex. One is one-bedroom and one-bath and is occupied by a childless couple that eats out most nights. The other side a four bedroom two-bath unit with a family having five children a lawn in the back for the kids to play on, trees that provide shade and a garden to grow vegetables in. The landlord has to do a bunch of structural repairs and cosmetic improvements on the building, and he jacks up the rent on the family five times what it was, while keeping the other rent the same. The landlord justifies the difference saying that the larger family was charged an unfair rent before.”[/i]

    Frank, your example is perfect on two levels. The rent for a one-bedroom is significantly lower than the rent for a four-bedroom two bath.

    Any intelligent landlord will raise the rents proportionally. Otherwise he will end up with the four-bedroom vacant because the five-times rent is not competitive with the other four-bedroom rental opportunities in town.

    The market will prevail in the scenario you describe.

  63. Frankly

    [i]The world needs all of us.[/i]

    Yes, I tend to agree… and I like my can of mixed nuts!

    Matt – Loving Vs. Virginia!? Come on now… that is some serious conflating going on.

    I see your point. Do you equate our water rate structure as a civil rights issue?

  64. Matt Williams

    SouthofDavis said . . .

    [i]”It bothers me that we have a super complex rate structure (and proposed rate structures) that people like Matt try and defend”[/i]

    SouthofDavis, the rate structure is not complex at all. What do we expect from a water system? First and foremost we expect reliability. Access to water is simply the measure of reliability.

    So lets look at the rate structure from that perspective.

    We expect “instantaneous reliability” What are the components of “instantaneous reliability”? 1) a bill that is accurate and an accounting that ensures that our payment isn’t lost, 2) biological and chemical testing that ensures us that each time we draw water it is safe, 3) water dispensed in great quantity from fire hydrants whenever there is a fire, and 4) the knowledge that when we walk back into the house (from a trip to the store or a long vacation, etc.) that the water will flow when we want it to.

    The ‘instantaneous reliability” fee is the Distribution Charge.

    We also expect “long term reliability” What are the components of “instantaneous reliability”? They are that there is always enough water supply to meet our needs whenever we ask for that water.

    The ‘long term reliability” fee is the Supply Charge.

    We also want the water agency to not charge us for actual pumping costs and chemical treatment costs if we don’t use any water. Said another way we want to pay for the variable costs (electrical power and chemicals) only for the water we actually use, whether that is in the dead of winter or the heat of summer or the darkness of night, or the brilliance of mid-day.

    The “actual water used” fee is the Variable Use Charge.

    What is complicated about that?

  65. Matt Williams

    (continued . . . )

    Think of the Supply Charge as a April kind of thing.

    Just as happens when you go in to your tax accountant each spring and together you 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 on any amount you like, but you know 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 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.

    Said another way, the prior year’s actuals are the “first default” for setting the next year’s payments. With that said, in CBFR going forward there is a “second default” for setting your monthly Supply Charge. That value is the average value 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.

    So bottom-line, prior usage is only history that helps each customer predict their own future. If you choose to ignore that history that is your prerogative.

    ————————-

    One other thing, imagine for a moment that it is late in 2017 and the City of Davis has acceded to Bob Dunning’s objections to the summer peak lookback method of setting each customer’s annual mortgage amount for the fixed costs of the system and has replaced it by a “reservation system” (like the one described above) where every customer places a reservation for an amount of ccf per month that they will pay for. Each customer’s reservation sets the maximum usage for that customer in any individual month, and if a month comes along where a customer reaches his/her max either 1) his/her water shuts off until the next month begins, or 2) like in a cell phone plan s/he gets socked with very steep overage fees for the ccf over the reserved amount.

    For that hypothetical customer who uses 10 ccf in the 6 winter months and 20 ccf in the 6 summer months, what number of ccf would you set as their monthly “reservation” level?

  66. Matt Williams

    Frankly said . . .

    [i]”Matt – Loving Vs. Virginia!? Come on now… that is some serious conflating going on.

    I see your point. Do you equate our water rate structure as a civil rights issue?”[/i]

    A Civil Rights issue? No. An Equity issue? Yes.

  67. Don Shor

    South of Davis: [i]”Are you trying to say that a six acre apartment with 200+ units is “typical”?
    Take a walk from where you work to Downtown or the other way to the Davis Manor shopping center counting apartment buildings (you will see a lot of them, and I don’t think any will be over 200 units)… “[/i]

    There are about 14,750 rental units in Davis. 43% of them are in 44 complexes that have 90+ apartments, most over 100 apartments, some many more than that. Just 12 complexes house 17.4% of the renters in town.
    There are a couple of hundred ‘garden apartments’ in residential areas. The remainder are apartment buildings of the 20 – 60 unit range.

  68. SouthofDavis

    This morning I wrote:

    > No one has mentioned that the BIG apartment owners
    > in town are supporters of the base water rates set
    > by summer use since most big apartments are about
    > half empty in the summer and are using far less water
    > than when school is in session and the apartments
    > are full.

    I just put the word BIG in caps since out of the 519 apartments (Matt’s number) in town most are SMALL and are full regular people that spend 12 months of the year in Davis.

    I’m betting that if Matt looks at just the 44 BIG apartments (Don’s number) or even just the BIG apartments owned by Tandem (a politically connected BIG apartment owner that rents mostly to students) he will see different numbers than when he looks at ALL apartments in town.

  69. Ryan Kelly

    [quote]Mike H: BTW, I am definitely serious that I have zero intent to run for public office at this time. Why would I want to do that? Sit there and listen to hours of testimony at 11 pm about where to place a stop sign? [/quote]

    I really don’t think you are in a position to run for public office, Mike. There’s a little matter that you’d have to take care of first, regardless of your apparent disdain for the office of City Councilperson and local government process. I don’t think that you would risk public exposure that a run for public office entails.

  70. Michael Harrington

    Frankly wrote: “Matt – Do you equate our water rate structure as a civil rights issue?”

    Frankly: exactly right, in my mind. I see this project as the wealthy political and business elites using their 5 CC members and their poltical and legal power to attempt to transfer massive amounts of wealth from the poor and middle class.

    Since Sue left the CC, no one I know feels like we have anyone representing the poor and middle class in town.

    Also, we all have a right to basic amounts of clean, safe and affordable water. This water project and its sky-high rates and water bills violates that basic civil right.

  71. dlemongello

    Mike, we are all wondering where that is going to come from. Even just keeping current infrastructure going costs quite a bit more than we’ve been paying. If we cut peak consumption by 50% that would probably preclude the need for an additional supply, at least for a while, but that’s not going to happen Mike.

  72. Ryan Kelly

    I feel represented very well by the current City Council. I feel that they listen and honestly care about lower income citizens and middle class in Davis.

    I never felt that Sue represented the poor and middle class. I felt that she represented wealthy families of university faculty, and retirees who had a lot of time on their hands, who wanted to maintain the status quo. You didn’t support Sue when she ran for City Council. In fact you actively campaigned against her – even engaging in discussions about her mental health, so this is pretty ripe, coming from you.

  73. biddlin

    “Mark West and Ryan Kelly and ERM and Medwomen complain, but not much else.”

    I guess I can still be surprised at the depths to which some will sink . Particularly contemptible is the cheap shot at Elaine, who has worked diligently while being the object of gossip and second guessing by David and other local bloggers and journalists. In my dramatised account, she’ll be the heroine .

  74. dlemongello

    One of the primary things Sue looked out for was the fiscal health of the city and that benefits everyone. Some of the main issues under that are the affects of growth, city employee costs and infrastructure such as the wastewater plant.

  75. Frankly

    In the Enterprise issue from yesterday, Dunning blasted another hole in the yes arguments writing that some of us getting water during the peak times will still be getting well water. Having known that, I may have voted no. Too late for me.

    Can someone that knows something about this please comment?

    Deep well water is better than shallow well water, but still full of minerals and junk.

  76. Robb Davis

    Frankly – It has always been and will always be a conjunctive use project. Even a cursory examination of the water rights issue and when we can draw water and in which amounts would make it clear that some well water will always be used. I did not see anything in Dunning that was new. There was no hole blasted in anything. He merely found a way to make what has been known for over a year seem like yet another scandal. And you know what? He accomplished his job… I am scandalized.

    Michael Harrington: [quote]Since Sue left the CC, no one I know feels like we have anyone representing the poor and middle class in town. [/quote]

    If Sue, or you, or anyone in town really cares for poor citizens then we should all be focusing on assessing exactly what a doubling of rates (Measure I fails) or tripling (if it passes) are going to mean for the poor here. Though the prospects don’t excite me, [b]I will gladly join you and Sue and whomever else at public comment next week[/b] to ask the CC to set up a task force to assess, using data not just overblown rhetoric, the needs of the poorest members of our community as it concerns the changing water rates. For they surely are changing and we should start working now to set up a task force whose work can begin as soon as the election is over.

  77. dlemongello

    Robb,
    Not to say there is not more work to be done, but Herb Niedermeyer (sp?) at one of the evening water forums at the Senior Center, said they are starting a program like PG&E’s Lifeline to help address this issue.

  78. Frankly

    Robb Davis – I didn’t know about the conjunctive use. Dunning might have scandalized you, but he educated me.

    Is there somewhere I can go to see the results of a water quality study for our well water. I need to purchase a new water heater, and also a water softener. I was putting off both decisions until I knew of Measure I would pass. For example, I would get a tankless and no water softener if it passed. Now that I know I might be getting well water for half of the year, I want to see what junk is in that water. I still might need to consider a water softener to protect the water heater, my plumbing and all my appliances and fixtures.

    I live in West Davis and I think I remember being told that West Davis has some of the hardest water in town. I believe it looking at our shower even after doing the squeegee thing every time. I would say that shower glass has about a 10-year lifespan max before it is covered with a milky white coating that no amount of descaler, pumice and elbow grease can get rid of. Given that shower glass can cost hundreds, if not thousands of dollars, I think this is a very big deal.

  79. Robb Davis

    Thanks diemongello – simply can’t get to everything these days. Based on previous discussions on this topic here on the Vanguard I am not sure if such programs offer a great deal. However, my bigger point is to actually have a real discussion about how poorer people are actually going to be affected by the changes that are coming. I am probably being uncharitable but I feel like some engaged in the discussions about water are using “poor people” as a prop–as a kind of chess piece–as in “all those poor people are really going to suffer”.

    That may be true but a real look at what this means over what time horizon matters. This is, by the way, why I have asked about whether cost increases were in real or nominal dollars in the out years. Anyway… I am in favor of having a hard look at these questions and doing all we can to help families and individuals who are affected by the changes. I have dealt directly with homeless university students and others who have been driven into homelessness not by poor choices or addictions but because they have lost jobs or were unable to cover rising costs. This is not a theoretical exercise for me but I want to understand exactly what the parameters are.

  80. Rifkin

    Pardon my ignorance. I have a question for the water mavens, the answer to which I probably should know:

    If a homeowner has a backyard swimming pool — I don’t — under the current water rate structure, does he pay less, more or the same if he fills his pool in the summer, as opposed to filling it in the winter?

    It’s quite clear to me that Mr. Swimming Pool will pay more under the proposed CBFR system in the summer, as will everyone else. I just don’t know if there is a seasonal variation, now.

    As to whether a seasonal difference is equitable: I generally think it is. To my mind it’s simply supply and demand. For a given supply, the price needs to rise when demand is highest and fall when it is lowest in order to achieve equilibrium. If you hold prices even from trough to peak demand, you will have excess inventory in winter and a shortage in summer.

    I understand that the water availability varies, too. But that happens to work in the same direction: where supply tends to be smallest when demand is highest, and greatest when demand is lowest. That is all the more reason to raise prices in the summer and lower them in the winter.

  81. Rifkin

    I have another question, the answer to which I likely should know the answer: Will the City of Davis be charged in the same manner as other property owners for its water usage?

    I would bet that the City is the single largest user of water in Davis, given the parks, the public pools and toilets, the greenbelts and street cleaning, not to mention water used for other activities by the employees. As such, it would make economic sense that the City should pay for its water based on its seasonally adjusted costs. If the largest user (by a long shot) is exempted, the City will have no incentive to conserve and aggregate demand will skew higher in the summer period, which redounds to the harm of all other property owners.

  82. Matt Williams

    Rich, the swimming pool filling months will be March and April.

    If you fill your pool in November, December, January or February your next year sewer bill will go up. If you fill your pool in May through October your next year’s water Supply Charge will go up.

  83. medwoman

    Rusty and Frankly

    [quote]I mean for many that’s their life choices, why should I be panalized?[/quote]

    Sorry about the late response. This was not the sound of silence but rather the fact that I just finished a very busy day at work. So, at the risk of “nuancing this away”, I would agree completely with Rusty’s statement if all lives’ choices and and outcomes were this simple. However, they are not. Also, neither one of you bothered to acknowledge the second part of my statement and previous posts in which I stated that I am perfectly happy to pay, and as you both know have frequently stated that myself, and those in my economic situation should be willing to pay more in order to help those who have not had my good fortune. Unlike what the two of you seem to believe, I do not believe that life is as straight forward as the “good guys”and the “bad guys”, the industrious and the lazy. There are many other factors involved.

  84. DT Businessman

    “If you fill your pool in November, December, January or February your next year sewer bill will go up.”

    Au contraire, Matt. If you keep the pool heated, the kids will be peeing in the pool reducing toilet flushing.

    -Michael Bisch

  85. DT Businessman

    “The ones who were there know whom I wrote about.”

    And the ones who weren’t there know “whom” Mike was talking about. Between the two groups, we all know what the hell Mike is talking about. Right?

    -Michael Bisch

  86. DT Businessman

    “But I can say this: I was taken by surprise by what I saw. If I had had my phone out of my pocket, and caught it, I would certainly post it.”

    Somebody get Mike a new phone, daggnabit, so we can all see the blocking and other unseemly activity only he can see.

    -Michael Bisch

  87. Edgar Wai

    [Re] ([url]https://davisvanguard.org/index.php?option=com_content&view=article&id=6135:commentary-addressing-misconceptions-about-cbfr&catid=50:elections&Itemid=83#comment-176861[/url])

    Robb said:
    [quote]Edgar – Maybe you have already elaborated on this but as to your third point: what are the loopholes that could be exploited? Also, my point is that I think we know pretty much how people use water in this town. It simply takes more water to keep lawns green in the summer (many people simply turn off irrigation in the winter–as does the housing cooperative where I live). So, I think we pretty much know the answer to two. The issue then is whether the estimates David gives account for this. I assumed they did but wanted to find out. Thus my original question. Please say more about “loopholes” or point me to where you have written about this. Thanks [/quote]

    [b]Loopholes[/b] are opportunities inherent to a policy that allows a person to intentionally or unintentionally receive any unfair reward. The fact that loopholes exist may be unintentional, but the lack of commitment to fix loopholes is intentional. I should not be the person informing you about the risks. This should have been the job of the City.

    Here is a list of issues of CBFR that do not exist in better billing method:

    1. CBFR penalizes payers who are efficient form the start.
    2. CBFR pits its payers in competition against one another.
    3. CBFR has no built-in mechanism to repay payers.
    4. CBFR allows a user to pay $0 for the capital cost.
    5. CBFR does not result in the payer of the capital owning the capital.
    6. CBFR results in sudden surge of responsibility when someone decides to stop using the capital
    7. CBFR may results in an increase in responsibility even if the user maintains the same usage level
    8. CBFR may result in increase in responsibility even if the user reduces its usage level

    The proof of each of them only requires simple arithmatic. The obviousness of these loopholes are hidden when the audience is distracted to focus on their own payment, or on the overall picture with big numbers. When a town has 60K people, overpayment of $1 from each person allows a cheater to collect $60K. For a vote like this, it is irresponsible to think only in terms of how much it might save you. It is ethically necessarily to consider if the rates itself is fair.

    In the following I show loophole 1.

    [b]1. CBFR penalizes payers who are efficient form the start.[/b]

    [b]Scenario:[/b] A city has 60K people, and a water plant is designed based on their historical use. Knowing that the water bill will be higher, many people started to invest in better water-saving equipments. By the time the new rate starts, 30K of them (Group A) have become efficient users, who only use 1 time more water in the summer. The other 30K people (Group B) are inefficient users who use 2 times more water in the summer. In the first year, there is no change in behavior, and the total capital cost is $10 million. In the second year, all of the inefficient users finally decided that they should become more efficient and cut their use to the level of Group A. The population of the city never expanded. And the whole city was stable with this use pattern for 30 years when the debt services of the captial cost ends.

    Question: Did anyone cheat in this scenario? If so, who cheated, and what is the magnitude of the exploitiation?

    To answer the question, it helps to describe the problem in simple terms. This is their use pattern for Year 1:

    Year 1
    o Winter A:20 B:20
    o Summer A:40 B:60

    According to CBFR, the split is 40% and 60%. This means in Year 1, Group A paid $4 million, Group B paid $6 million.

    Year 2
    o Winter A:20 B:20
    o Summer A:40 B:40 (Excess=20)

    According to CBFR, the split is 50% and 50%. Group A and Group B both pay $5 millions each. Because the plant was built to support the original use pattern, now there is an excess capacity of 20.

    When the payments are added over 30 years, Group A pays $149 million, Group B pays $151 million.

    So far, even when the numbers are shown, it is not obvious who cheated or what the magnitude of the exploitation is. But note that the water plant was built to support the original estimate when B was an inefficient user. B is accountable for 60% of [b]the[/b] capital cost, not just the first year, but the whole 30 years. This is the correct split of the $300 million: A: $120 million, B: $180 million. Under CBFR, Group A had overpaid $29 million. That is $967 per person on top of the $4000 of their fair share. For a household of four, that is $3867 per household.

    Every single 4-person household in Group B, who delayed their water-saving investment by 1 year, had just gotten a free check of $3867 for their procrastination.

  88. Edgar Wai

    (Cont…)

    It could be worse. If the people in Group B did better than Group A in Year 2:

    Year 2
    o Winter A:20 B:20
    o Summer A:40 B:30 (Excess=30)

    Group A will overpay by $49 million, that is $6629 per four person household. The more Group B invest now, the more money they may rob from Group A with the [b]assistance[/b] of CBFR. [b]Assistance[/b] here is a keyword. Group B could do this, only because of the way CBFR is created. Group B will rob Group A not knowing that they had done anything wrong. Group A might not even know that they are being robbed.

    What if there is only one single irresponsible procastinator?

    If Group A is 60K people minus one, and Group B is just one person, then:

    In Year 1, B will pay $250 for the capital cost. In Year 2 to Year 30, B will pay $4833. In total, B will pay $5083, while everyone else will pay $5000 each. By arithematics, B only robbed 4 cents from each person, but paid less by a total of $2417

    What if B is not a single person, but a [b]Company[/b] or an [b]Organization[/b] that uses equivalent of 1000 people (merely 1.7% of population)?
    Answer: Then B will pay less by $2,356,749, taking $40 from each of the other 59000 people.

    When a billing rate does not get its math right, people can be robbed and not know.

    [b]Loopholes[/b] are opportunities inherent to a policy that allows a person to intentionally or unintentionally receive any unfair reward. The fact that loopholes exist may be unintentional, but the lack of commitment to fix loopholes is either ignorant, irresponsible, or intentional.

    Please fix the issues of the water rates.

    [ Water Rate Issues ] ([url]http://skylet.net/docs/2013-02-18-2347-WaterRatesInfoList.htm[/url])

  89. Edgar Wai

    Bottom line of Loophole 1 from the scenario above with back-of-envelope calculation:

    If you invested in $4000 for water-saving equipment and laugh at your neighbor who didn’t, when you see that your neighbor installs a water-saving equipment the next year, your neighbor had just took $4000 out of your pocket, and both you nor him might not even know.

  90. DT Businessman

    So Edgar, let me see if I understand your position correctly. You’re against Measure I, despite it resulting in a more sustainable water delivery system, because you have discovered “loopholes” in the rate structure. Ignore for the moment the fact that once the voters have approved Measure I, we voters still have the right and wherewithal to continue to weigh in on the rate structure. Yet if Measure I fails, as you so advocate, we simply carry on with the existing rate structure, itself riddled with loopholes, except the loophole riddled existing rates WILL MORE THAN DOUBLE, all the while we’re still saddled with an unsustainable water delivery system.

    Please try to keep your response to 1, maybe 2 paragraphs because that’s all I will read anyway.

    -Michael Bisch

  91. Ryan Kelly

    I get lost in all of the scenarios that people are creating to measure fairness. What I do know is that currently Water is the cheapest utility that I pay. My current bill has me paying $35 for two months of water ($17.50 per month). Even if this doubles, I’m still paying no more than weekly trash collection and sewer service (think waste water treatment), and less than PGE. However, I am also willing to pay more, much more, for each of my telephone, Internet connection, satellite TV, monthly parking, gym fees, and on and on. How is it that people are willing to pay through the nose for these luxury items, but cry foul and say that they have lost all trust in our recently elected local government when asked to contribute more to an upgrade in our essential water delivery system that will be more sustainable in the long- term?

    Even if my water bill triples I will still be paying less than many of these services and, no, I will not be priced out of my home. I am currently paying more per month for the school taxes that people claimed was essential for this community, when I don’t even have a child attending Davis schools. For all those people who campaigned for those taxes, well it it is time to step up and put some money toward our City’s infrastructure and long- term sustainability. We’ve had 15 years of deferred maintenance and patching of our current system, all in the name of “stopping development” and thwarting plans of the “rich elite”. It’s just hogwash – creations of imagination and without merit. We voted out of office people who are seeking power through other means and we are allowing it to happen, frankly.

  92. Matt Williams

    Edgar, I would like to try a different tack. Instead of me talking about the CBFR rate structure and you pointing out its loopholes, perhaps we would get further if you would propose a rate structure with specific rates as an alternative. Then we can look at any loopholes it may have in the same kind of granularity that you have looked at CBFR.

    I look forward to learning from you.

  93. Edgar Wai

    Re: Michael Bisch

    I want clean water, I want a fair rate. When I told Matt about the issues, my expectation was a commitment to correct the rates. You saw the loopholes. It costs $0 to change. You could consider my asking for a fair acknowledgement of the loopholes and a responsible commitment to fix them.

    Throughout the talks about Measure I, one of the legitimate requests was that of “alternative”. The Yes side attacked the No side on the ground that the No side did not give any viable alternative. Here, I am not attacking the physical project. I am only attacking the rates. I gave an alternative. You are telling me that it was meaningless for me to have found the better alternative because you would have ignored it anyway.

    [ My position on Measure I] ([url]http://skylet.net/docs/2013-02-04-0812-WaterEvaluationSheet.htm[/url])
    (Sorry I haven’t been updating it.)

  94. Don Shor

    Edgar: [i]”The Yes side attacked the No side on the ground that the No side did not give any viable alternative.”[/i]
    That is correct. The No side has never given a reasonable alternative that meets the city’s long-term needs for water quality and peak capacity requirements.
    At this point I will just count you as a ‘no’ vote based on your opposition to the rate structure. I simply don’t know how to even try to discuss it with you, because your approach is far too detailed and complicated to review. I think you are seriously over-thinking this, and are valuing your concept of ‘fairness’ over many other aspects that would seem much more compelling to me.

  95. Mark West

    Matt Williams: “Edgar, I would like to try a different tack. Instead of me talking about the CBFR rate structure and you pointing out its loopholes, perhaps we would get further if you would propose a rate structure with specific rates as an alternative.”

    Actually Matt, a better question would be to ask Edgar to use his analysis on the current rate system, then ask him to decide which of the two (current vs. CBFR) is more fair. There is no such thing as a perfect system (unless everything was free). We can always work to improve the rate system, but we only have one chance to get the best water system.

  96. Edgar Wai

    I have been proposing Equal Discount.

    The relation between Equal Discount and CBFR is that Equal Discount is the “mother equation”. It is the form of CBFR that still works when the assumptions about usage patterns are removed.

    [How Equal Discount Works] ([url]https://davisvanguard.org/index.php?option=com_content&view=article&id=6126:sunday-commentary-ii-dunnings-campaign&catid=50:elections&Itemid=83#comment-176540[/url])

    The algorithm of Equal Discount can be adapted as more precise data is gathered. These are some changes to CBFR that will make it closer to Equal Discount and fix the loopholes. In all of the following, keep the calculations of Distribution Charge and Use Charge, and change only how Supply Charge is allocated.

    1. The ultimate fix that will solve all loopholes presented is this: Instead of using Summer Usage to determine the Supply Charge responsibility for the next year, use the maximum usage ever of the user to compute the running estimate of that user’s responsibility for each billing period. When you do this math, you will see that there are times when the user needs to be reimbursed. This could happen when a new user joins the system.

    I don’t see any technical difficulty on why #1 cannot be done. If for any reason it cannot be done, the weaker fixes are derived from partially changing CBFR to approach Equal Discount.

    If there is no technical difficulty, and if desired, we can discuss why this the math of Equal Discount is correct.

  97. Frankly

    [i]”Are we really going to allow those elitist water wasters to keep their pools?[/i]

    Rusty49, you and I both know those pools are a target for the water user holier than thou crowd. They are thinking, how dare you swim in your own pool when so many don’t even have a bath tub to splash around in. The only fortunate thing is that the collective cannot confiscate someone’s pool without a lot of mess and expense. But they can make the water so expensive you will be forced to fill it will milk or beer.

  98. Matt Williams

    Edgar, please flesh your high level concept out for us using the Davis system. All the data is available to you. I look forward to it in full flower. Expand your three person #1 out to be a 16,433 customer #1. fixed non-consumption-based distribution costs are $2.4 million (13.3% of total costs0. Fixed consumption-based costs are $ 12.0 million (66.7% of total costs). Variable costs are $3.6 million (20% of total costs). Total costs are $18 million.

  99. Matt Williams

    Frankly said . . .

    [i]”Rusty49, you and I both know those pools are a target for the water user holier than thou crowd. They are thinking, how dare you swim in your own pool when so many don’t even have a bath tub to splash around in. The only fortunate thing is that the collective cannot confiscate someone’s pool without a lot of mess and expense. But they can make the water so expensive you will be forced to fill it will milk or beer.”[/i]

    Once again Mr. Ly, you stagger me. Don’t you know that pools use less water than an equivalent area of lawn does? Grass transpires more than pools evaporate. Pools are not the prime target, lawns are.

  100. Don Shor

    [i]Don’t you know that pools use less water than an equivalent area of lawn does? Grass transpires more than pools evaporate. Pools are not the prime target, lawns are.[/i]

    Depends on whether the pool has a cover, and what kind of grass you have.

  101. Edgar Wai

    [Re:] ([url]https://davisvanguard.org/index.php?option=com_content&view=article&id=6135:commentary-addressing-misconceptions-about-cbfr&catid=50:elections&Itemid=83&cpage=90#comment-176972[/url]) Matt

    [img]http://skylet.net/docs/2013-02-21-0302-EqualDiscountCBFRComparison.png[/img]

    [ Equal Discount vs CBFR comparison, showing loopholes of CBFR ] ([url]http://skylet.net/docs/2013-02-21-0231-EqualDiscountCalculator.htm[/url])

    [ The Excel Sheet ] ([url]http://skylet.net/docs/2013-02-21-0220-EqualDiscountCalculator.xls[/url]) – For those who wants to play around with it.

  102. David M. Greenwald

    Frankly:

    I’m surprised that this is news to you as I reported on it two years ago ([url]https://davisvanguard.org/index.php?option=com_content&view=article&id=4200:will-new-water-project-unequally-benefit-davis-residents&Itemid=79[/url]).

    You even had a few comments on the article!

  103. David M. Greenwald

    ” Not to say there is not more work to be done, but Herb Niedermeyer (sp?) at one of the evening water forums at the Senior Center, said they are starting a program like PG&E’s Lifeline to help address this issue.”

    Donna, I covered this last week, it’s about $5 a month.

  104. Matt Williams

    Edgar, that is a good start. Now let’s begin to factor in consumption. Here are the annual consumption numbers.

    ___________ Annual___Peak
    ___________ Consumption Consumption
    Current___ 4,549,938 3,055,110
    1-May-2013 4,420,681 2,972,106
    1-Jan-2014 4,292,072 2,888,962
    1-Jan-2015 3,987,096 2,691,202
    1-Jan-2016 3,746,532 2,533,708
    1-Jan-2017 3,717,213 2,515,173
    1-Jan-2018 3,688,677 2,497,105
    1-Jan-2019 3,725,564 2,522,076
    1-Jan-2020 3,762,819 2,547,297
    1-Jan-2021 3,800,448 2,572,769
    1-Jan-2022 3,838,453 2,598,498
    1-Jan-2023 3,876,838 2,624,483

  105. SouthofDavis

    Matt wrote:

    > Don’t you know that pools use less water than an
    > equivalent area of lawn does? Grass transpires more
    > than pools evaporate. Pools are not the prime target,
    > lawns are.

    Then Don wrote:

    > Depends on whether the pool has a cover, and what
    > kind of grass you have.

    And if you have kids who splash 6″ of water out of the pool every time they have friends over…

    It seems like Yolo County wants to get rid of apartment pools since the “permit” to have one is now close to $1,000/year and it costs at least $6,000 a year for the pool service and DAILY (365 days a year) water checking that the county requires. If that was not enough last year they went from one to two pool inspections a year (so they have two chances to fine you and/or charge for a reinspection if a fraternity guy walks away with the life preserver or a tenant puts cardboard in the gate latch so their friends can get in without a key)…

  106. Matt Williams

    Edgar, here are the annual Revenue Requirements

    Current_____ $9,978,000
    1-May-2013 $9,978,000
    1-Jan-2014 $12,971,000
    1-Jan-2015 $16,214,000
    1-Jan-2016 $20,268,000
    1-Jan-2017 $21,889,000
    1-Jan-2018 $23,640,000
    1-Jan-2019 $24,822,000
    1-Jan-2020 $26,063,000
    1-Jan-2021 $27,366,000
    1-Jan-2022 $28,734,000
    1-Jan-2023 $29,596,000

  107. Edgar Wai

    Re: Matt

    I do not see the point of showing CBFR result each year. From my 1 year spreadsheet, you already see the loopholes of CBFR. When you do more years, the situation will just get worse for CBFR, because the overcharges accumulate over the years, and CBFR has loopholes specific to year to year differences.

    I can start doing that tonight, but be prepared to see more loopholes of CBFR.

  108. Matt Williams

    Edgar, I want to thank you for all the due diligence that you are causing my brain to go through. You ask really good questions. Really relevant questions.

    With that said I want to engage one of your loopholes and ask you a question at the end. Here is the scenario that you laid out

    Edgar said . . . To answer the question, it helps to describe the problem in simple terms. This is their use pattern for Year 1:

    Year 1
    o Winter A:20 B:20
    o Summer A:40 B:60

    According to CBFR, the split is 40% and 60%. This means in Year 1, Group A paid $4 million, Group B paid $6 million.

    Year 2
    o Winter A:20 B:20
    o Summer A:40 B:40 (Excess=20)

    For the purposes of discussion lets modify CBFR a bit to illustrate the issue you have raised. So in Year 2, Group A paid $4 million, Group B paid $4 million, and we have a $2 million revenue deficit.

    So we have to create a $2 million special assessment to cover the $2 million deficit. How should that deficit be split between Group A and Group B?

  109. Matt Williams

    So Edgar how do you reward B for contributing 20% of free capacity to the water system. Is conservation not to be rewarded in Equal Discount? How do you square that with California Constitution Article X?

  110. Edgar Wai

    [img]http://skylet.net/docs/2013-02-22-0847-EqualDiscountCBFRExcessComparison10Years.png[/img]

    [Updated comparison table] ([url]http://skylet.net/docs/2013-02-21-0231-EqualDiscountCalculator.htm[/url])

  111. Matt Williams

    Edgar, in your updated comparison table you state [i]”In Equal Discount billing, the monthly charge for the Capital cost would not increase unless the user reaches a new peak use. Your neighbor saving water will not affect your bill.”[/i] How do you reward people who conserve?

  112. Edgar Wai

    Re: Matt

    To reward conservation, the rates need to tied to the cost of not conserving.

    If the cost of not conserving is ecological, then we need the monetary accounting for the ecological damage. If the ecological cost is proportional to the volume of water used, then there should be a fee applied per volume used. In this way of accounting the users will not be in competition against one another, and the legitimacy of the “reward” is established.

    Year 1
    o Winter: A:20 B:20
    o Summer: A:40 B:60
    Ecological Damage: 140 fish dies
    Ecological Split: A:60 Fish, B:80 Fish

    Year 2
    o Winter: A:20 B:20
    o Summer: A:40 B:40 (Excess=20)
    Ecological Damage: 120 fish dies
    Ecological Split: A:60 Fish, B:60 Fish

    Question: When B conserves water, B is allowing new people to move into Davis. Shouldn’t B be rewarded?
    Answer: B’s share will decrease when someone does move in. The source of the “reward” will be from that new person, not from A.

    When a damage is not realized, there is no stakeholder to compensate.
    When a benefit is not realized, there is no [b]funding source[/b] to give a reward.

    When the system takes money from A to “reward” B, the system is not doing a fair transaction.

    In the scenario above, a reasonable way for B to pay less is to let someone move in to his house.

    Year 3
    o Winter: A:20 B(+C):30
    o Summer: A:40 B(+C):60 (Excess=0)

    In this case, A:40%, B:60%. Then internally, B splits the bill with C.

  113. Edgar Wai

    Matt, when I was doing the yearly spreadsheet, I encountered these two problems:

    1) According to the numbers you gave me here: [Ref] ([url]https://davisvanguard.org/index.php?option=com_content&view=article&id=6135:commentary-addressing-misconceptions-about-cbfr&catid=50:elections&Itemid=83&cpage=90#comment-176989[/url])

    In 2015, the annual revenue target is $16,214,000, while the peak consumption is 2,691,202.

    As far as I understand, the $ value is that for the capital (for constructing the water plant). According to the math of CBFR, the plant is paid for by the Supply Charge, which comes from the peak consumption times the rate you set, then times 12.

    2,691,202 x $0.32 ([url]http://public-works.cityofdavis.org/water/rates/proposed-water-rates/all-debt-scenario-rates[/url]) x 12 = $10,334,216
    There is a deficit of $5,879,784

    I have considered whether the “Annual Revenue” you gave me includes the Distribution Charge and Use Charge, but the numbers don’t add up if I make that assumption.

    To meet $16,214,000 with peak consumption of 2,691,202, CBFR needs a rate of $0.51. The rate listed on the City’s webpage ([url]http://public-works.cityofdavis.org/water/rates/proposed-water-rates/all-debt-scenario-rates[/url]) are too low. They would result in a deficit for the water agency.

    2)
    The list of annual revenue you gave me ends in year 2023. By year 2023, are all the debts paid off?

    The sum of those values is $241,541,000 This looks like the entire construction cost. By Year 10, the sum is already $241 million, and User A had already paid $8675. This $8000 looks like what Brett Lee mentioned here ([url]https://davisvanguard.org/index.php?option=com_content&view=article&id=6072:councilmember-lee-explains-support-for-water-project&catid=50:elections&Itemid=83[/url]). However, this $8000 is paid in 10 years, not 30 years as Brett Lee said. So, it is important for me to confirm whether the data you gave me corresponds to a debt that is paid off in 10 years. Otherwise Brett Lee’s conclusion would be incorrect.

  114. Matt Williams

    Good question Edgar.

    The answer to your question is rooted in the basic accounting differences between an income statement and a cash flow requirements analysis.

    1 ) Cost incurrance and revenue requirement are aligned.

    2) Variable cost incurrance and consumption are aligned.

    3) Fixed cost incurrance and the cash flow requirements associated with that fixed cost incurrance are not aligned because of the impact of the issuance of debt.

    4) Revenue requirement is aligned with cash flow requirements based on fixed cost incurrance

    Hope that helps.

  115. Matt Williams

    No, debt incurred in 2016 will not be paid off until 2046 (30 years of debt service beginning in 2017).

    The total borrowing for the plant construction is spread over a six year period from 2013 through 2018.

    Therefore the debt service ending dates of those borrowings will be spread over a six year period from 2043 through 2048 if all the borrowing is of the 30 year kind, and spread over a six year period from 2033 through 2038 for any borrowing from the State Revolving Fund.

  116. Frankly

    Matt and Edgar are marvelous. Great work guys! I’m actually following the accounting analysis and it makes sense.

    I run into similar challenges all the time in my business. I get my head so far into the numbers that I end up at a level or two above the people I need to explain them to. The trick is to distill the explantion back to a level of understanding from when I started the analysis and then walk them through to the next level(s) of required understanding. .

    What might have worked well here is for Matt and Edgar to host a presentation with a big Q and A component. I suspect it could qualify for college credits.

  117. 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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