Many have been quick to praise the actions of council this past Tuesday. For example, the Davis Enterprise gave “cheers” to the council “for heeding the community’s concerns about convoluted and confusing water rates, and giving clear direction to its newly constituted Utility Rate Advisory Committee. That panel will come back to the council with some water rate options, none of which will include the controversial look-back pricing on which our rates are based now.”
Unfortunately, we will never know how deep those community concerns actually went. Was it a huge number of people or a small but vocal minority? Moreover, the council has left the public without a clear mechanism to express support for the current rates.
On Tuesday, the council voted to direct the URAC to examine the modified CBFR and examine and recommend a rate plan with no-look backs and a 12-month window. But just two days later, the Vanguard was forwarded, by multiple people, an email from Herb Niederberger, the City’s General Manager of Utilities that cast doubt on whether that can happen.
Mr. Niederberg noted that such modifications “effectively transform CBFR into a conventional water rate design with a fixed component of $8.25/month (3/4-inch meter) and two variable rate tiers, 0-20 ccf/mo @ $4.34/ccf & >20ccf/mo @ $5.74/ccf.”
“This results in the fixed component of the water bill generating approximately 13% of the total revenue and about 87% of the total revenue relying upon consumption. While this is a very conservation based rate, it is also a recipe for disaster,” he writes.
He states, “Even minor fluctuations from historical demand result in catastrophic losses in revenue.” He adds, “Staff would never recommend such a structure to City Council.”
Two councilmembers in clear, unmistakable language, told the Vanguard on Thursday that council and not city staff will make the call. However, is council really going to ignore this pointed a warning from city staff and implement the rate plans anyway?
This, of course, leads to me wonder if council really thought all of this through properly. Why was there such a rush by council to put this before the URAC before staff even had a chance to study whether it was feasible?
This led me to a critical realization. Prior to Tuesday, the choices were clear. If I wanted the rates to be tossed out, I vote Yes on Measure P. If I want the rates to remain as they are, I vote No on Measure P.
But Brett Lee clearly told the public on Tuesday that he wanted the rates changed regardless. I asked multiple people on Thursday, if I want to keep the current rates, how do I vote on Measure P?
No one can answer this question.
Think about it, whether you agree or disagree with the surface water project, the rates, or anything else – we have rates on the book, and there is no way I can express that I want to keep those rates. Is that a fair and open process?
I was in fact told, by a councilmember, “the rates are gone either way.”
The choice is whether or not I want the city be to be sued. If I want the city to be sued for failure to comply with Measure I, you vote yes. If you don’t want the city to be sued, vote no. That’s the choice.
So here is the real dilemma that voters face. The liability that the city has is a real issue. The city could be sued if Measure P passes – it could be sued by Michael Harrington for the failure to adhere to the guidelines of Measure I in terms of having a rate structure passed and it could face huge liabilities by the failure to carry out its obligations.
But where is the safe landing spot on rates now if Measure P fails? While CBFR was confusing to some, it actually provided huge improvements in terms of fairness for lower end users. Under a traditional rate model like Bartle Wells, low end users’ fixed fee for meters was such that their per unit cost was about 50% higher than those at the top end.
Now Matt Williams did a brilliant job on Tuesday illustrating that there were remaining inequities and how his new formula would close those inequities. However, at the end of the day, CBFR was a far better option than a meter-based rate structure.
So now the council led by Brett Lee voted to preclude CBFR by prohibiting the URAC to consider the current model or any model with look backs. This is similar to what Dan Wolk did in December 2012 when he attempted to forbid the WAC to reconsider CBFR. The WAC overruled him, but the URAC likely won’t.
If the staff’s analysis is correct, however, the new CBFR model does not have enough fixed components to meet the needed standards for revenue in case demand drops to near nothing.
I understand that council will make the ultimate call, but are you telling me if Harriet Steiner, Herb Niederberger, Mark Northcross, Dennis Dove, and the URAC all tell them it’s not legal they are going to pass the new CBFR over their objections?
I tend to take these councilmembers at their word, but I find it hard to believe they could do that.
If the new CBFR is DOA, and council precluded the old CBFR, that leaves us with a flawed traditional rate structure that will be vastly unfair.
Given those choices, I would like to have the ability to choose going with the old CBFR until we can figure out a better rate structure through careful analysis.
But apparently, I have no way to electorally express that preference. Council has effectively removed my ability to vote my true preference. Whatever choice that remains is not one I think they particularly want.
—David M. Greenwald