Council Directs URAC to Alter the Water Rates

Matt Williams, Donna Lemongello, and Sue Greenwald listen intently to council discussion on Tuesday night.
Matt Williams, Donna Lemongello, and Sue Greenwald listen intently to council discussion on Tuesday night.

One week before the election that may decide the fate of the city’s surface water project, the city council voted unanimously to direct the URAC (Utility Rate Advisory Committee) to examine the three rate systems that are proposed – CBFR, Bartle Wells, and a hybrid.

Councilmember Brett Lee directed that they could not consider a rate structure with a look-back and wants to see both a tiered and no-tiered option. Councilmember Lee stated clearly, “The current CBFR is precluded because it has the look-back.” He indicated that the hybrid structure proposed during public comment by Donna Lemongello and Matt Williams was acceptable.

The timeline for events would be that on June 5, at a special meeting, the URAC would consider the rate structures. The council would be presented with a June 10 update. The URAC would continue their work at the June 12 regularly scheduled meeting and the council would have a full agenda item on June 24.

Herb Niederberger stated that he did not know if the consultant could work fast enough to get the hybrid CBFR to the URAC in time for a meeting next week, but stated that he would try.

Former Mayor Sue Greenwald would come out in favor of the compromise.

She said that she had been working with the Yes on Measure P campaign because she believes the rates are unfair. “The Yes on Measure P campaign has always suggested a standard for fairness could be if you use twice as much, you pay twice as much, i.e. an equal amount per gallon,” she said.

She argued that under the current rates, if you use twice as much as a single family home, you pay almost three times as much. “What we’ve kind of proposed is a compromise which as a general principle if you use twice as much, you pay twice as much.”   She also suggested bypassing the URAC and the council making the decision themselves.

Donna Lemongello and Matt Williams quickly presented their compromise with PowerPoints during public comment.

Why the late timing? Matt Williams explained, “The thing that caused us not to do this until now is that we were afraid that it would cause us to lose the protection of the resilient revenue that’s been fixed.”

Williams-presentation-may-27

“The white space that you see under the black bar is free water that people are getting,” he said. “Those are the highest users and they are paying for less water than what they are getting.”

Who is paying for the high end user’s water? “The people that were most responsible, who were most efficient about using the water are paying 6% of the revenue right now and only using 2% of the water. That is not equitable!”

The compromise plan was not without its critics. Several proponents of Measure P cried foul at the last moment offer that seemed to them an attempt to save the water rates and defeat Measure P.

Michael Harrington, who was the original sponsor of the water referendum, the lawsuit and the water rate initiatives, told the council, “The burden is on the city council to come up with fair, lawful rates.”

He added, “It’s unfortunate that these proposed changes come up so late… Changes need to be made but it’s the city’s issue to come up with those (changes). “

He said he disagrees with Bob Dunning that we need definitive action right now, instead arguing, “It needs to be careful and thoughtful.” He said no matter what, the rates have to go up to pay for the project, the only question is “whose ox do you gore.”

He concluded, “So if we’re going to radically change the rate structure, you have to have a rate study that’s updated for that.”

John Munn, the only candidate for city council who favors Measure P, said, “We are pleased that the City Council finally recognizes the need to revise the current water rates structure, but it is too late to jump ahead of Measure P with a new rates proposal.”

“These rates are not equitable and put the burden of paying for the surface water project onto single family homes,” he stated. “At the same time, the Council borrowed money to keep water rates low for two years, after which it would be too late to do anything about the much higher rates next year. But concerned residents didn’t wait for two years. Instead, we qualified Measure P so that people could vote on their water rates.”

He argues, “Now, we are supposed to trust the City Council to change its mind and do the right thing? After putting this town through years of struggle, you can’t just say ‘never mind.’”

Instead, he argued, we should trust the voters and that “the only way we can be sure of getting new water rates is to vote ‘YES’ on Measure P.”

It was not just the proponents of Measure P crying foul at the late timing. URAC Chair Elaine Roberts Musser and member Johannes Troost both argued that it was too late to change the rates.

Elaine Roberts Musser told the council, “The ballots have already been printed, they’ve gone out, people have voted. You have to let the process take place. Wait until Measure P passes or doesn’t pass. The URAC is ready to deliberate, to give you the best advice possible.”

She concluded, “I would ask that you allow the URAC to carry out its mission.”

Early in the discussion, Joe Krovoza worked hard to attempt to put off the discussion and throw it to the URAC. However, he was clearly out-numbered on that issue and Brett Lee forcefully argued his case.

He would argue he wants to re-design the rates regardless of the outcome of Measure P, that CBFR is not calculated as he thought it was and therefore he was ready to talk about substitute rates and ready to do it tonight.

As he explained, “The Measure P folks, their whole goal is to have us look at the rates.” He stated, “Measure P doesn’t say anything about the rates that replace them, it simply rescinds the rates.”

He argued that, by replacing the rates in a simpler and easier to understand manner, “Measure P folks should be pleased, if they don’t trust us they can still vote yes.”

He continued, “For the opponents of Measure P, their concerns are that really what the Measure P proponents are really trying to do is tie up the water project in potential legal battles, because they look at the proponents of Measure P and see that those are the same people who sued over the water rates, those are the same people who opposed Measure I and so their concern is not so much that the rates are perfect, let’s keep them as is, the opponents of Measure P really want us to address the rates in a responsible way, but they would like to see the project move forward in the least costly way possible.”

For Brett Lee, the bottom line is whatever happens with Measure P next week, “I want to change the rates.” He added that this is “the mechanics of the rate structure,” that he wants to see changed. “They’re complicated, people are understandably confused.” He added, “There is no need to have the complexity of the six month summertime look back.”

He continued, “I’m comfortable talking about it and moving forward with a substitute rate structure. I’m comfortable talking about that tonight.”

Brett Lee lamented all of the delays in the process. He stated, “One thing I’ve reflected upon in my two years up here is how little I’ve accomplished.” He said he has thought about “the differences I’ve made and they’re quite small.”

He stated, “I’m not really willing to sit on my hands for the next four weeks waiting until we have everything teed up. I know that I want to change the rate structure.” He said if you take the Proponents of Measure P at their word, they want a fair equitable rate structure, and “if we can deliver that tonight, then they should be happy.”

Lucas Frerichs, who would second the motion, argued that they are trying to get to a solution that works for the community. He said he personally appreciates, regardless of the outcome, that we will be looking at adjustments.

Joe Krovoza said that he was inclined to support the motion by Brett Lee based on the understanding that it is building off the current Prop 218 rates, which Brett Lee agreed with.

—David M. Greenwald reporting

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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47 Comments

  1. Ryan Kelly

    Supporters of Measure P should be happy. This is what they wanted, right? The rates are being looked at and changed to be more equitable and won’t rely on previous use for setting rates. If they are not, it is because they aren’t being allowed to control the process. I’m happy that the Council is moving ahead to correct something that they see as flawed and could be better. They don’t have to wait for the outcome of a measure that only cancels the adopted rates and doesn’t offer a solution. It is silly to be accused of acting “too late,” but then being asked to wait longer. I believe that the broader community doesn’t want the Council to wait.

  2. Matt Williams

    Ryan, you have summed up the thoughts Donna and I wrestled with prior to bringing this forward now rather than later. In the end, we felt that every one of the solutions that we put forward was both educational for the measure P voters and a clear positive step toward a constructive solution that was responsive to the issues that the supporters of Measure P were raising. Our last two slides were as follows. They sum up why we believe this is a constructive solution and a good voter education step:

    Final Slides
    .
    Final Slides

    1. Alan Miller

      You can watch it on City video when it comes out later today. Let us know if you stand up and applaud . . . in your house.

      BTW, I hope you can join us for “Ballots and Burritos” Thursday evening for a community discussion on all the issues / candidates on the ballot. We really need a token conservative to beat up on. No, I kid; speaking for myself, the best meetings we’ve had are when we’ve had participants from across the political spectrum and your input would be valuable and make for a more informed discussion.

      [Though I do know your Clarke Kent identity, Superman (statements made on blog that matched exactly something said in a council meeting regarding the “F” word), I won’t point to the telephone booth.]

      1. Davis Progressive

        i watched it last night. i thought brett was very good even though i didn’t quite agree with him. however, it’s clear he’s fed up. we all should be. really disappointed in the direction of council this year.

      2. Frankly

        I think you must be mistaking me for that better looking and more articulate friend of mine. He stands in for me every now and then. I will see if he is available Thursday to attend.

      1. dlemongello

        What rules were changed? They did not even let us do anything more than have our 3 minutes each for public comment and it has been referred to the URAC. What is changed is that if everyone is being sincere here, whether P passes or not we will have a better rate structure.

        1. Davis Progressive

          if i voted on may 15, my consideration for measure p would be the current rate versus the unknown rate. if i vote on june 3, i have additional options on the table to consider. maybe i believe that the council will enact the new cbfr. so i vote no. maybe i don’t believe them so i vote yes. those are different considerations than i had two weeks ago.

      2. Matt Williams

        DP, no rules were changed. Information about a path to an improved rate system was brought forward. The voting public was given educational information about a solution that was/is responsive to the concerns they have been raising. The Council made a definitive statement that the stated goal of the supporters of Measure P was a shared goal of the Council, and that definitive statement motioned by Brett Lee and passed by the Council with a 5-0 vote memorialized that definitive statement. The Council didn’t just talk the talk, they walked the walk. An exercise in voter education.

          1. Matt Williams

            I understand DP, but isn’t hat just inherent with any educational process? In week one of your law school torts class (I believe you are a lawyer)you didn’t know what you knew after week ten of that class. If you were asked the same question in week two and in week eleven, you might have different answers because of what you have learned in the time interval. Is that inherently bad? No. It is simply the march of education.

          2. Davis Progressive

            the more approrpriate analogy may be a trial. during a trial and before trial there are rules for discovery so that attorney’s can’t conduct trials by ambush. too late in the process and the evidence could be ruled inadmissible.

          3. Matt Williams

            I thought about a trial analogy, and the reason that I didn’t use it is that there are admissibility rules in a trial, while in an election there are no such restrictions. Therefore it is much more like the free flow of information that is the hallmark of education.

            Further, one of the flaws of democracy is that there is no guarantee that any appreciable amount of the voters are actually paying attention. Therefore, just providing access to meaningful/relevant information is no guarantee that the information will actually be “heard.” Placing it in a formal, public venue meant that it not only would have a much better chance of being truly “heard” but it also would be subjected to a certain amount of public vetting and due diligence, both of which are good. Although there is no guarantee, the more public vetting and the more due diligence a concept is subjected to, the more likely it is to not be inadvertently concealing some misinformation.

          4. Tia Will

            DP

            “too late in the process and the evidence could be ruled inadmissible.”

            Well that is a problem right there isn’t it ? If exonerating or clearly incriminating evidence is discovered late, it shouldn’t be excluded if the goal is to determine the truth and enact justice. It is only if we are valuing a win more than justice that this should matter. In the case of voting, deciding to cast your ballot early is a statement in itself that you have decided not to listen to any more evidence but have decided to act on what you know at the time of casting your ballot regardless of what may occur later.

      3. Alan Miller

        It isn’t a week before the election. With the huge percentage of voters now voting absentee (am I right that number is nearing 50%?), it is in the MIDDLE of the election. No other way to cut it.

        I’m not sure the rules were changed, but it is an odd time to take up the issue.

        1. Matt Williams

          I think both Donna and I agree with you that it was an odd time. However, the choice was between letting the voters vote without the benefit of education or vote with the benefit of education. It would have been ideal to have brought this to the URAC on May 8th, but Donna’s and my very first meeting on this was on May 7th. The framework of the solution we presented last night didn’t come together until well after the URAC meeting. As a result if we were going to share it with the public prior to the election, then doing so through the Council was our only available option.

          1. Alan Miller

            Timing aside, on first glance, many people seem to believe this is an option that meets many stated goals, and I believe I may be able to figure this one out. I give you credit for being willing to part with moving forward on a rate structure you, I believe, helped create and champion and became the structure-to-be for awhile. Having got that far, being willing admit that, even if it was theoretically a better system, that the perceived or real complexities were in and of themselves problematic with the community, well, that is noble. Pardon the run on sentence.

          2. Matt Williams

            Back in the days before I put the word “Lapsed” in front of “Episcopalian” I got exposed to the words of Proverbs 16:18. I truly believe that “Pride goeth before a fall” and that knowledge is always evolving based on new information. Donna brought me new information and in the process what was good became better.

            There are two different versions of the 80-20 Rule. The first is that once you have 80% of the information, you have enough information to make a well informed decision. There is always the opportunity/ability to gather more information in order to make an even more informed decision, but that leads to the second version, which is that when you have completed 80% of the work, the remaining 20% is going to take just as much work to complete as the first 80% took.

            The political process in late 2012 and early 2013 meant that CBFR had to step out into the world as it was at that time. The consensus at that time was that it was better than the alternatives. That didn’t mean it couldn’t get better. Now, thanks to Donna and Bob Dunning, and lots of other people who have helped with its evolution, the adopted version is ready and able to be even better.

      4. SODA

        DP, you were critical of Joe on another thread yet he was the one lobbying for URAC to take a look at the new formula in addition to ones they were tasked to assess. Agree?

        1. Davis Progressive

          yes. my criticism of joe is that he has allowed his campaign to usurp his duties as mayor and has run an increasingly poor and disorganized meeting. the leader on this issue was not joe but brett and lucas, who have increasingly had to assume additional duties as the others have disappeared.

  3. Davis Progressive

    since elaine doesn’t post here anymore, since wrote on the enterprise:

    “What makes anyone think that the “compromise” solution now being put forth will be any better than the original CBFR?”

    why does the council keep putting elaine in these positions?

    1. Don Shor

      My guess is it’s because she works hard, does her homework on issues, and runs meetings fairly and efficiently. Why do you keep criticizing her? Elaine has given countless hours of volunteer time to the community. And she has the courage to post under her own name, wherever she shares her opinions.

        1. Don Shor

          I believe that the reason she quit posting on the Vanguard was because of the unrelenting personal attacks by people who posted anonymously.

          1. Davis Progressive

            i ask the question again, do you believe her comment posted on the enterprise was appropriate given her position and the charges of the council? you ask why i keep criticizing her, it’s because she keeps doing things that should be criticized. you seem to forget she was non-stop attacking everyone when she was on here, including under the cover of psuedonyms.

          2. Don Shor

            I believe she is perfectly within her rights to post her opinions under her own name. When she speaks as chair of the commission, she should indicate that is what she is doing and should speak accordingly as the representative of the commission. Commission chairs are not muted by their positions. They can speak as freely as they like as private citizens.
            Why do you post under cover of a pseudonym?

          3. Davis Progressive

            that’d be like saying brett lee can speak out on subject matter before the council, as a priviate citizen and expect that he can speak his mind without political repercussions.

          4. Don Shor

            He can speak out on subject matter before the council as a private citizen. If I recall, Lamar presented his budget proposal from the floor, not the dais. You seem to be saying that commission chairs lose the right to speak freely on public issues.

    2. SODA

      DP, as chair or in terms of content the CC is tasking the URAC with?
      If the former, I believe it is the URAC body which elected her. If your quote is accurate, I would say as chair she has overstepped her position, just as I believe she did with the WAC by being very vocal in her opinions before the body deliberated. Is that what you mean?

      1. Davis Progressive

        ” I would say as chair she has overstepped her position, just as I believe she did with the WAC by being very vocal in her opinions before the body deliberated. Is that what you mean?”

        yes! exactly!

  4. dlemongello

    To make a comment like that shows she does not understand what we are advocating. The whole thing has been greatly simplified without losing any of its solid core.

    1. Don Shor

      Elaine’s question is perfectly reasonable.

      What makes anyone think that the “compromise” solution now being put forth will be any better than the original CBFR?

      I cannot tell yet what impact the compromise proposal would have on my water bill, compared to the current rates or the previous structure. Nor do I know immediately whether it will be ‘better’ for renters such as my employees, or high-use businesses such as mine, or for residential customers such as most of my customers, or for people who live in mobile home communities. If ‘better’ equals ‘simpler’ then perhaps you have a point. But that isn’t the only meaning of ‘better’.

  5. Don Shor

    Sue Greenwald said in the Enterprise,

    I think that when we run the numbers, we will find that it will come closer to charging everyone an equal amount per gallon.
    The issue is a fairer rate structure, by which I mean one that charges everyone about the same amount per gallon rather than charging the median single family home over 40% more for every gallon.

    The logic of the CBFR was that it charged, as one component of the rate structure, a higher rate for those users who caused the system to need a higher peak capacity.
    Peak capacity comes from summer use.
    Sue and others believe that this was going to cause homeowners to pay “over 40% more for every gallon,” and they want to change that.
    We need a certain amount of revenue from the ratepayers, so it stands to reason that Sue and others are advocating that renters who live in apartments must make up the difference if we seek to equalize the rate per gallon.
    In short, they are advocating that apartment dwellers must pay higher water bills than they would under the CBFR. That is the consequence of their definition of fairness.
    Over 50% of Davis residents are renters. Some 20,000 of them live in apartments. Evidently fairness means their water rates are going to go up, even though a large proportion of them don’t live here during the summer. They don’t cause the peak capacity needs that determined the size of the system, but they’ll be paying for it. Of course, they largely don’t vote, either.

    1. Rich RifkinWDE 73

      SUE: “The issue is a fairer rate structure, by which I mean one that charges everyone about the same amount per gallon …”

      As long as I have been paying water bills, I believe Davis has always had a tiered-rate structure, where the first gallons you use in the period cost less and beyond a certain threshold the latter gallons cost more. I thought the idea behind that has been conservation.

      Am I wrong to think that the CBFR structure, while more complex, is likewise tiered to encourage conservation?

      1. Don Shor

        I think so, and tiers are designed to incentivize conservation. I know the state passed a law requiring water districts to achieve 20% conservation. That was signed under Schwarzenegger. Somehow they have to demonstrate that they are trying to do that, and the simplest way is to show that you have a tiered rate structure.
        The Dunning “every gallon should cost the same” rule that is now being promoted by Sue Greenwald and others dis-incentivizes conservation.

        1. Rich RifkinWDE 73

          One of the other complaints made by some of the Measure P proponents (especially Paul Brady) is that the tiered structure is incentivizing large irrigators, like the City or certain subdivisions to eschew the higher quality surface water for irrigation, using instead lower quality well water for irrigation. I am not sure if this prediction is entirely right. I don’t know the economics of wells and the piping it would take to irrigate with well water. However, if what they say is true, it seems to me a good thing*, not worthy of a complaint. It makes sense to me to have higher quality domestic water–which then goes to the waste water system–and lower quality irrigation water, which goes back in the ground.

          *There may be downsides to the financing of the water project if this becomes widespread. But I doubt that it would become very widespread. The other minor risk is that the well water they irrigate is so salty that they spoil their soil with salts.

        2. Matt Williams

          Don, tiers can accomplish many different results simultaneously. In the case of our proposal they absolutely do incentivize conservation, as well as ensure that cost burden is not unfairly shared by the various user classes. In the end after all the numbers are moved around, the original intent of CBFR is still accomplished.

          Neither Donna nor I see what we have put together as a “compromise” as it was characterized in Elaine’s comment in the Enterprise. Rather we see it as clean up of work that has gone before, as opposed to something new. It still uses a consumption basis to establish fiscally resilient and sustainable fixed revenue. “Cleanup of work that has gone before” resonated when I first heard it. An “evolution” or “a coming of age” also work. “Compromise” implies movement toward middle ground from two markedly different positions. The supporters of Measure P have frequently said in their literature and words that “The Measure P campaign has never advocated for any rate structure. We have consistently said that it was up to the council to fix the rates once P passed.” In that statement there doesn’t appear to be anything to “compromise” with … although to be fair, there have been individual members of the Yes on Measure P forces who have strayed from that party line and voiced specific complaints about the adopted system.

  6. dlemongello

    It is all about where you set the tiers. Because the distribution charge also comes into play, a good tier break, one set at the right level, helps a lot with reaching equitability between high and low users and also is a conservation incentive, but not as strong as a lower break point of course.

  7. Don Shor

    Then once they set the tiers, I’ll know if the compromise proposal is better or worse for me, for my employees who rent, and/or for my customers. I’d be curious how you define ‘equitability between high and low users’. Do you think high users should pay more per gallon than low users?

    1. Matt Williams

      Don, the proposal sets very specific tiers with the break point between 20 and 21 ccf per month. The slide below is from the presentation.
      Final Slides
      I believe that answers the questions for you for your employees who rent, and/or for your customers. For consumption at 21 ccf and above the rate per ccf is $1.90. At 29 ccf per month the $7.20 savings built up through the lower per ccf rate in Tier 1 is used up, so any of your customers who use more than 29 ccf per month in any individual month will pay a higher Variable Use Fee under this proposal. However, that increase will more than likely be offset by a decrease they experience in their Supply Charge.

      Regarding your equitability question, the simple definition is that if you use a certain percentage of water you should pay that same percentage of the total revenue. Given the reality of Fixed Fees, that is harder to do at the low volumes. The following graph from our presentation shows the top 10% of the Single Family Residential accounts (1,473 of the 14,734 SFRs) with the currently adopted rate in red, the Measure P proposed 12-month change with no tiers in blue and Donna’s and my proposal in green.
      Final Slides
      .
      When you add in the current Bartle Wells rates and include all 10 of the 10% increments (deciles) you can easily see from the huge yellow spikes on the left side of the graph how the ratepayers who are efficient users of water are using only 2% of the SFR water but paying 6% of the SFR total revenue, while the least efficient users of water on the far right are using 25% of the SFR water and paying only 20% of the revenue. They are getting all of their the water between the top of the yellow bar (20%) and the black horizontal bar (25%) for free. Under our proposal, the top of the green bar (26%) and the black horizontal bar (25%) are far more comparable.
      Final Slides
      .
      Because they are in Tier 2 for their usage, as the highest volume users conserve their green bar will come down faster than their black bar and they will reach eqitability balance. They will be rewarded for their conservation.

  8. dlemongello

    An equitable arrangement is where % of total fees paid are equal to % of total water used, so if someone uses 1% of all water they should pay 1% of all costs incurred. At the moment with the proposed tiers for residential set at $0.50 up to and including 20 ccf per household (both SFR and MFR) and $1.90 for greater than 20 ccf the greatest equitability is reached, according to Matts calculations for 2 tiered 12 month CBFR. And to answer your question directly, no, we are striving for same cost per gallon for all, except maybe irrigation only accounts where there are fewer amenities (fire protection and such) provided.

    1. Don Shor

      Don’t take this wrong, but your three sentences contradict each other. If you have tiers at all, then it will not be equitable by your definition. If you have tiers of different rates per ccf, then you clearly won’t have the same cost per gallon for all. And like Alan, I don’t understand what you mean by “12 month CBFR.”

      1. Matt Williams

        Don, your statement is correct if you look at each component of the rate structure in isolation; however, if you look at the total impact of the rate structure on the total fees that users pay for water then what Donna has said is correct. The combination of the Supply Charge and the Variable Use Fee work in harmony to produce a maximum amount of equity across all user groupings.

        The supporters of Measure P have argued in many venues that “The CBFR fee included in the new water rate calculations relies on summer water use to determine year-round rates. CBFR bases each ratepayer’s monthly (January through December) water rate on the water used during the 6-month peak consumption period (May through October) of the previous year. Therefore, the cost per gallon of water would be largely determined by summer use. This system assumes higher costs for summer water delivery, yet there is no evidence that delivery of summer water is significantly more costly.” The solution they have voiced is to base the Supply Charge on a full 12 months of use rather than the 6 months that is used to calculate the Supply Charge in the currently adopted rates.

        Donna’s and my proposal embraces their proposed solution and incorporates it “whole cloth” into the rate structure we proposed to Council. We look forward to presenting it to the URAC on June 5th. Right now the communication from the URAC Chair is that they don’t anticipate putting a discussion of it on the agenda, but that we are welcome to come to public comment and make share it with the URAC as a public comment.

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