CBFR: Complicated Structure or More Fair to Majority of Rate Users?

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water-rate-iconTonight at the Davis Community Chambers will be a debate over Measure P. At the center of that debate will be the issue of CBFR and whether it really does what it claims to do.

In their column this week, Former Mayor Sue Greenwald and Former Chair of the Budget and Finance Commission Mark Siegler put forward the idea of “false peak-use analysis,” noting that the council argues that the rate-setting was fair “because they say the cost of the surface water project is dictated by ‘peak’ summer use. Similarly, they argue that it is fair to charge one household less per gallon than its neighbor year-round if that household can afford an extended summer vacation.”

They argue, “This ‘peak use’ argument is based on false assumptions.”

They shift the argument away from the necessity for structuring the rates for peak use, arguing “the city claimed that we needed the surface water project for reasons that have nothing to do with peak use, such as ‘securing river water rights,’ ‘improving water quality’ and ‘complying with new salinity and selenium standards. In fact, city consultants proved that we could have achieved all necessary current goals — including meeting peak capacity — without the project. And the council acknowledged that further downsizing of the treatment plant would not significantly decrease total project costs.”

They add, “The City Council has made the incorrect claim that two-thirds of people will be paying less under this new system (when compared to the equally unfair Bartle-Wells rates). This false claim relies on the assumption that big summer irrigators like the city, school district and some large-lot neighborhoods will pay massively more.”

In his column this morning, Bob Dunning takes up the fight he has been waging for a year and a half against CBFR. He writes, “This is your final warning. Yes, the much-discussed, much-maligned and intricately complicated consumption-based fixed rate system of billing residents of Davis for the water they use kicks in tomorrow.”

He writes, “By contrast, the city of Woodland, our partner in crime in the Great Water Project that Will Save the World, simply bills people month by month by month as they use the water. No CBFR and no rate increase for summer usage versus winter usage.”

He adds, “Now, as much as I hate to give Woodland credit for doing something more intelligent than the Second Most Educated City in America, there’s no escaping it. Their rate structure is fair and straightforward and easy to understand. Ours isn’t.”

Sounds simple, but it’s not. In fact, in their arguments, Michael Harrington and John Morse argued against the very system that Mr. Dunning seems to advocated for.

The Bartle Wells rates are fatally flawed because they charge different single family residence customers different fixed rates based on the size of the water meter, which they argue is a random assignment based on meter size and not based on usage.

As they argued in their brief, “It would appear that the size of the water meter installed on the single family residence properties was based on some random selection during initial water meter installation and not on a deliberate choice by the City or the rate payer based on the load intended to be placed on the system.”

The plaintiffs would argue that the meter size, in effect, forces low end users, most of which they claim are seniors, to subsidize the costs for water use by larger users.    As Michael Harrington argued, “That’s just not fair, not proportional.”

And yet that’s what Mr. Dunning is arguing for.

It was last year, we argued that the fundamental problem with these rates that would be imposed under Bartle Wells are that they are unfair – unfair to the low-end users, the people who use the least water and tax the system the least.  They are heavily subsidizing the high-end users – those with large hopes, expansive irrigation systems and swimming pools.

bill-comparisons

If you want to understand the nature of the problem, look at the lowest-end users in 2018 under the Bartle Wells system.  An individual who uses 5 ccf per month is likely a senior with limited vegetation requirements.  They may well live on a fixed income.

Currently (when this was written) these individuals pay $19 per month.  Under the Bartle Wells Inclining Block Rate system (which is the more fair of the two that the council has asked the WAC to consider) by 2018, their rates will be $60 – for almost no water use.  At 8 ccf, the cost only increases another $8.  In other words, for the first 5 ccf the cost is $60, but for the next 3 ccf, the additional cost is only $8.

These are people who are not only on the lowest end of use, but likely seniors and on fixed incomes.  And for almost no usage of water they will be paying more than $60.

cost-per-ccf

What is happening here is that under the Bartle Wells system in 2018, the vast majority of the costs are not for water use, but rather are fixed costs.  The result is that the low-end users are actually subsidizing the larger users.

Under the Consumption Based Fixed Rate (CBFR), at least some of those fixed costs are not based on meter size, but are based on actual use.

This is certainly a more complicated way to structure a rate system, but it is also a much more fair way to do for the lower end users. It doesn’t make the system completely fair, but the costs are actually more proportional to the use than the Bartle Wells.

—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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One thought on “CBFR: Complicated Structure or More Fair to Majority of Rate Users?”

  1. Davis Progressive

    dunning keeps going to the well without facts, i wonder how much he alone has cost the city.

    i remember when he made his argument against the rate structure, harrington put it into their brief, and maguire slammed it down.

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