by Greg Clumpner
Having listened to the opinions presented to and by the URAC, reviewed the data available, and considered the critical factors and decisions the City must respond to, the following are my conclusions and recommendations.
- The Importance of Revenue Stability – Ideally, fixed costs are recovered through fixed charges and variable costs are collected through volumetric rates. The higher the percentage of rate revenue collected from volumetric rates (i.e., above variable costs), the greater the revenue instability. The additional cost of a higher than normal rate stabilization reserve would likely be required, but increase the cost to customers.
- 100% Volumetric Rates – Volumetric rates that collect 100% of costs (i.e., both fixed and variable) are unfair, unstable, and susceptible to legal challenge. For example, a SFR customer who leaves town for three months in the winter (and uses no water) pays 0% of the system’s fixed costs and, therefore, would be subsidized by other customers.
- Purpose and Cost Allocation of Regional Water Supply Project – This project is not solely for future growth, but is for long-term sustainability, water quality (including addressing Chromium-6 regulations), and contributes to meeting wastewater treatment requirements at a lower cost. The costs of the Regional Water Supply Project are likely 60-80% fixed costs, and these costs should be shared by all customers through fixed and volumetric charges.
- Social Equity – The perception that the “social-equity bar charts” presented numerous times fairly represent social equity presumes that all costs are variable. This is just not true, and I believe this is a poor measure of the fairness and social equity of rate structures.
- Simplicity – CBFR in any form is complex, opposed by much of the public (via Measure P), and is difficult for the general public to understand.
- Selecting a Rate Structure – All of the alternatives presented may be “legal” but not all are well understood, accepted by the public, or well suited for Davis. Recommending a rate structure is finding the best overall fit in light of all the complexities the City is dealing with at this time.
- Rate Structure Alternative – I can support any of the following rate alternatives (assuming that “conventional” means that about 40% of rate revenue comes from fixed charges):
o Conventional – Different Uniform Tiers by customer class (preferred)
o Conventional – SFR 3 Tiers with Tier 1: 0-10 ccf/month (acceptable)
o Conventional – SFR 3 Tiers with Tier 1: 0-18 ccf/month (acceptable)
- “Balanced Payment Plan” – I support the Loge/McCann proposal for a balanced payment plan.