Fritz von Coelln was one of a few Fullerton residents who attended the evening meeting of the Water Rate Study Ad Hoc Committee at the Library Community Room on December 5. Consultant Mark Hildebrand presented recommendations for restructuring the water rates and meter charges, 5 annual increases proposed by the Ad Hoc Committee (to support up to 9 miles of water pipe replacement per year and other water system capital improvement projects), and automatic “pass through” increases from Orange County Water District (OCWD) and the Metropolital Water District (MWD).
Consultant Mark Hildebrand presented recommendations for restructuring the water rates and meter charges, 5 annual increases proposed by the Ad Hoc Committee (to support up to 9 miles of water pipe replacement per year and other water system capital improvement projects), and automatic “pass through” increases from Orange County Water District (OCWD) and the Metropolitan Water District (MWD).
After the meeting Mr. von Coelln calculated what he would expect to pay in 5 years (excluding any pass-through increases) if the City Council were to approve the proposed restructuring and annual increases. His calculations were based on his household average water usage over the last year of about 14,000 gallons per 60-day billing cycle and his one-inch water meter. He concluded that the water portion of his utility bill would “double by 2024!”
Hildebrand confirmed that Mr. von Coelln’s formulas and methodology were correct (with the understanding that the rates used in his calculations are not final and may be adjusted by City Council when they begin their discussion on water rate changes in February).
Von Coelln found that “The proposed water rate restructuring would reduce the lowest tier water rate by one third and would allow for double the water usage at the lowest cost tier, but it would also dou- ble the monthly charge for a one-inch water meter. While these changes are more beneficial to people who use more water, they would not be beneficial to me.”
The current tiered rates have motivated many people to use less water. But to bet- ter comply with Proposition 218 (the 1996 Howard Jarvis Taxpayers Association sponsored initiative which was intended to limit municipalities from using fees and charges to raise revenue beyond cost of services), Hildebrand is recommending a water rate schedule tied more closely to actual water costs.
Under this proposed sched- ule, the “tier 1” rate and the increased amount of water billed at that rate would be based on the cost of water from OCWD and the amount they allow the city to pump from its wells.
The “tier 2” rate would be based on the cost of buying water from MWD which is about twice the price of pumped water.
The “tier 3” rate would be based on the cost of city water conservation measures.
While the “tier 1” pricing would be reduced by one third, tiers 2 and 3 would increase by 22 and 27 percent, respectively, and would apply to a more limited portion of water used.
The recommended rate structure shifts almost 19 percent of water revenue from water usage to water meter charges–to help maintain revenue when water con- sumption decreases.
According to Hildebrand, the shift also reflects a “more equitable” sharing of the cost of the water system in line with industry standards. The water system must be able to provide enough capacity to meet the potential demand of the pipe size attached to a customer’s water meter, regardless of the amount of water they use, and the smaller meter sizes have been paying disproportionally more, based on capacity, than the larger meters.
For comparison, a five-eighths inch meter rate would increase by 52 percent while a one-inch meter would increase 100 percent and the charge for the largest meter sizes would increase by over 250 percent. For water customers like von Coelln, who has a one-inch meter and is a low water user, the lower (tier 1) usage rate will not fully offset the increase to his water meter charge.
In the table above, the “Current Cost” of water compared to the “Proposed Restructured Cost,” a household with a five-eighths meter size that uses 10,000 gallons in a 2- month billing cycle will experience an increase to their bill before applying any proposed annual increases, while a house- hold using 20,000 gallons will receive a reduction in their cost.
Comparing one-inch meter households, the change is just as dramatic. A household using 10,000 gallons will have double the increase in cost over a household using 20,000 gallons. These differences are due to the higher water user no longer being charged the “tier 2” rate and the reduction in the price in “tier 1.”
If approved as proposed, the first annual increase of 15 percent would be applied across the board to the restructured water tiers and water meter size charges on July 1, 2019. Each July for the subsequent 4 years, increases of 14, 11, 5, and 4 percent would result in the change that Mr. von Coelln calculated. However, increases for other water customers may not be as substantial as for him.
Looking at the last 3 columns of the water rate comparison table above shows the cost after restructuring and after water rate increases over 5 years for 10,000 and 20,000-gallon households with a five- eighths inch meter or a one-inch meter.
The change for a low water user, like von Coelln, with a one-inch meter is over double that of a 20,000 gallon household with a five-eighths inch meter. Again, the difference is due to the reduction in “tier 1” cost and the new water usage rate schedule allowing for more water to be billed at the lower rate.
Looking at the amount paid by the different users in fiscal year (FY) 2024 the water bill charges are graduated from $105 to $140 to $147 to $181 according to the meter size and the amount of water used.
Von Coelln expressed concern about reducing the financial incentives for lower water use, and he questioned the combination of capital improvements (such as water mainline pipe replacement) and general operation and maintenance.
“For transparency there should be a separate charge for capital so we can see that that pool of money is not absconded for other non-pipe repair purposes,” he said. He recommended that the Ad Hoc Committee have more discussion before for forwarding their recommendations to the City Council.
There are no more Water Ad Hoc Committee meetings scheduled. The proposals are set to come before Council in February.
Categories: Local Government