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EID by the numbers: EID proposes 4 years of rate increases

By From page A1 | February 29, 2012

Editor’s note: This is the first story in a series that examines El Dorado Irrigation District rates, spending and debt. Two public hearings on EID’s proposed rate restructuring will be held at 6 p.m. on March 26 at the Cameron Park Community Center, 2502 Country Club Drive.

El Dorado Irrigation District’s proposed new rate structure goes on trial in Cameron Park on March 26. EID’s Board of Directors will presiding as judge and jury.

The board will also take comments on the new rates during its regular March board meeting at EID headquarters, 2890 Mosquito Road, Placerville, at 9 a.m. the same day.

Following the 6 p.m. rate hearing, the board will discuss and possibly approve a four-year package of incremental rate increases that would take effect April 1.

EID General Manager Jim Abercrombie defends the new rates as fair, modest and necessary to maintain an aging $800 million infrastructure while meeting debt service requirements.

The prosecution, led by Cameron Park resident Greg Prada and El Dorado Hills resident Jon Jakowatz, charges that the proposed water increases compound over four years to half-again last year’s rates and, coupled with 2010 increases, effectively double rates between April 2010 and January 2015.

Village Life conducted an independent analysis of the proposed rate increase’s first-year and four-year impact on typical El Dorado Hills single family residential customers, based on typical El Dorado Hills usage provided by EID.

First year water rate changes (January to April 2012)
• $4.92 increase per bill for water
• $7.86 decrease per bill sewer
• $12.14 per bill for recycled water *

Compounded four-year rate increases
• $41 for water, pushing an average bi-monthly water charge from $119 for January 2012 to $160 in 2015, a 35 percent increase.
• $12 for sewer, from $136 per bill in 2012 to $149 in 2015, a 9 percent increase.
• $20 for recycled water, from $34 per bill in 2012 to $54 in 2015, a 56 percent increase.

EID opponents point out that the proposed rate increases overlap with the final year of the 2010 rate increases, which included a 5 percent across-the-board rate hike that went into effect on Jan. 1 and are not reflected in the above first year rate increases or EID’s proposed rate tables.

The resulting 2012 total rate increases are:
Combined January and April 2012 rate changes
• $10.57 increase for water
• $1.36 decrease for sewer
• $13.82 increase for recycled water *
* The proposed rates provide recycled water customers a $20 rebate on their water bill, not reflected in the above rate changes.

Abercrombie said he regrets not reminding ratepayers of the January 2012 increase. A notice has since appeared at the top of EID’s webpage addressing the matter.

Recent rate history
The 2010 rate hike package began in late 2009 as a five-year increase that compounded to 80 percent higher than then-current rates. It sparked a ratepayer revolt that played out in a series of raucous public workshops. Hundreds of angry ratepayers crammed into undersized venues to protest the increase and hear former board members rail against sins of the past and present.

A new generation of west county activists began questioning EID’s business practices in 2010 and haven’t stopped.

With the district’s critical debt to revenue ratio dangerously close to violating bond covenants, Abercrombie deftly fell back to a three-year, 43 percent rate increase package. To sell it he had to further downsize a district still reeling from a major bloodletting in 2008. He also negotiated a better deal on the clean hydro power generated by the El Dorado Powerhouse, just in time to net $11.5 million in a wet 2011, up from $3.5 million in 2010.

Abercrombie also restructured some of the district’s debt, sparking criticism that the district still relied on borrowing over cost cutting.

“It wasn’t our first or second choice, but given the drop in FCCs (hookup fees) it was the only reasonable way to get us there,” Abercrombie said.

A future EID by the numbers story will examine the district’s $390 million debt load.
Abercrombie also asked his 2010 board to order a formal Cost of Service study to identify costs and align them with benefits, thus creating a foundation to justify the next round of rate increases now upon us. The study is available on EID’s website, eid.org. Its actionable result recently arrived in our mailboxes.

Prop. 218 Notice
The Proposition 218 Notice leads off with two dense pages followed by detailed rate charts for each class of customer.

The lead paragraph summarizes impact of the rate increases for residential customers on a monthly basis, pinning the average single-family 2012 residential increase at just $6.08 per month for water-only customers, $2.38 per month for water and sewer, and an overall $1.55 per month decrease for recycled water users, due to the $20 rebate.

But neither the lead paragraph or the 20 or so that follow mention the fact that the proposed increases continue beyond 2012. Also unmentioned is the fact that the rates labeled “current” in the accompanying charts reflect a 5 percent increase that had yet to appear on an EID bill.

Restructured rates
The proposed rate structure is a departure from the 2009 conservation rate structure, which captured 30 percent of rate revenue from base rates and the remaining 70 percent from usage-based commodity charges.

The proposed 50/50 rate structure collects half its revenue from base rates and half from commodity charges, resulting in more stable revenue over wet and dry years.
A byproduct of lowering commodity charges is a shift of rate burden from high- to low-level water users, an indirect conservation penalty. To help offset that penalty, the new rate structure expands the ceiling for the low-water-use tier from 1,500 cubic feet to 1,800 cubic feet.

Water rates
Under the 50/50 structure the base residential water rate would be $47.50 for each two month billing period, up from $25.89 in 2011 and $27.18 in January 2012.
But base rates are just half the equation. The notice also proposes reduced commodity charges for low, medium and high usage brackets.

Both base and commodity charges would climb 11 percent in 2012 and 2013, plus 5 percent in 2015.

EID predicts the typical El Dorado Hills water customer will use .77 acre feet next year, an annualized average of 5,590 cubic feet per dwelling unit for each two-month billing period, according to EID’s draft Water Resources and Reliability report. In 2011 that typical use cost $113. In January it became $119.

Under the proposed rate structure the typical family would see its average water rates increase to $124 in April, an extra $5 every two months.

The proposed follow-on increases in 2013 through 2015 push average water rates up to $160, a $41 increase over the $119 current rate and $47 more than the 2011 rate.

Waste water
In EID parlance sewage is “waste water.” Waste water rates for a typical customer who generates 1,800 cubic feet of it in a two-month billing period rose from $129 in 2011 to $136 in January 2012.

EID’s 20,600 waste water customers lament that their sewer rates far surpass water rates, a fact that has frustrated Cameron Park and El Dorado Hills ratepayers, who generate 70 percent of EID’s rate revenue, according to Prada.

Abercrombie defends waste water rates as the cost of compliance with California’s strict “tertiary” treatment standards that require a thorough and expensive biological scrubbing of all waste water.

Prada dismisses tertiary treatment cost as less than one-third of overall waste water costs, “far less than either the 50 percent excess capacity or EID’s lavish overhead.” Both will be examined in a future story.

Under the proposed rate structure, residential waste water customers would see base rates drop and commodity charges increase. The resulting typical $128 waste water rate is $8 less than the $136 January rate and allows EID to claim a 6 percent decrease from current rates, despite the fact that typical use customers would see almost no change from 2011 rates, until 2013, when three consecutive years of 5 percent increases kick in.

The typical family would see its waste water rates increase to $135 in 2013, $142 in 2014 and $149 in 2015, a net increase of approximately $12, or 9 percent over the current sewer rate, and $21, or 15 percent over 2011 rates.

Recycled water
The roughly 4,000 recycled water customers in El Dorado Hills will see their rate calculation transform from a simple $0.00873 per cubic foot to a multi-factorial equation.

Like water rates, recycled rates will increase by 11 percent in 2013 and 2014, then 5 percent in 2015.

A new $20 base rate is offset by a rebate on their potable water bill, and as such does not affect recycled water rates. An expanded, three-tiered commodity charge ranges from 50 percent of the corresponding potable water rate for the first 3,000 cubic feet of recycled water, to 70 percent for the next 1,500 cubic feet and 90 percent for recycled water use greater than 4,500 cubic feet.

A typical family in one of the three El Dorado Hills planned developments that are “dual plumbed” to receive recycled water uses an annualized average of 4,000 cubic feet of the stuff, according to EID. It currently costs them $35 every two months, up from $33 in 2011.

Under the proposed rates, that family’s recycled water bill increases $12 in April, to $47, followed by increases averaging $2.50 per year for three more years, topping out at $54.50 in 2015, a 56 percent increase over current rates and 64 percent over 2011.
The rebate would create a significant reduction in water rates for recycled water users, and could dampen opposition from El Dorado Hills ratepayers.

Ag safe
Roughly 400 farmers would continue to enjoy long-standing discounted water rates, which Prada believes are excessive. “I don’t disagree with the preferences, but the magnitude of them keeps growing,” he said.

He contends that agriculture rates constitute an illegal subsidy under Prop. 218 and costs non-agriculture customers $1.5 million each year.

Schools not so much
A similar break for the 110 schools, recreation districts, homeowners associations and golf courses would disappear under the proposed rate structure, effectively doubling the cost of watering sports fields beginning in 2013.

EID staff is helping recreational turf customers implement water conservation measures — timers, frugal faucets and better spray heads.

The 1,300 legacy domestic irrigation customers would get a year to either qualify for the small farm rates or pay residential rates.

Rate calculator
El Dorado Hills activist and EID-defender Paul Raveling created an online rate calculator as part of his analysis of EID politics and finances on his website, sierrafoot.org.

With Raveling’s permission EID polished and expanded the calculator to cover future years, then put the whole thing on its home page.

Ratepayers are invited to plug in their water and sewer usage to learn what they’d pay under the proposed rate structure, and see the percent changes over January 2012 rates.

Raveling recently updated his rate calculator to include various comparisons to both 2011 and 2012 rates.

Mike Roberts

Discussion | 1 comment

  • Sue TaylorFebruary 28, 2012 - 12:20 pm

    So after we pay off the bond debt for EID's unsuccessful experiment at speculation, will our rates come back down? Or will EID continue to speculate on a failed housing market at the risk of losing more businesses and agriculture?



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