Water rate study produces some startling results

The Bartle and Wells Associates Nov. 3, 2015, CCSD Water and Sewer Rate Study has some startling results. Using the BWA proposed water rate example of six units per billing period (two-thirds of all bills at or below this level) would have a $25.50 base (no free water, as BWA calls it), plus four units at $6.50, plus 2 units at $8.50, plus a $25 Emergency Water System charge, which equals $93.50.

The November 2009 rate increases of 9.75 percent water and 15 percent wastewater passed during a most difficult economic time and under Proposition 218 procedural requirements. The community understood the needs of the CCSD and recognized their extensive, across-the-board cost-cutting efforts.

Comparing the above proposed rate charge example to the 2009 rate structure ($23.82 bimonthly base charge, which included the first six units of water) results in a 293 percent increase!

Six units per billing period equates to 75 gallons per household per day or, as assumed in predrought CCSD calculations, with 2.2 persons per household, 34 gallons per capita per day, or gpcd. The 34 gpcd is far below the average predrought, California urban use of 125 gpcd and the current 97 gpcd under drought restrictions according to the state water board.

Even long-term drought-stricken Australia’s average per capita use is 50 gallons! The price tag just using the drought-restricted 97 gpcd under the proposed CCSD water rates would be $188.

Wow!

The CCSD would be better off encouraging greater customer water consumption to better use the EWS system. Bartle and Wells Associates assumed a 70 percent predrought water usage rate could actually reduce the potential use of the EWS in the future. It could extend large water consumers’ use of the alternate water source, Warren Ranch/Winsor Water.

Conversely, using the EWS 500 acre-feet-per-year production capacity could yield a significantly higher production revenue stream. Higher water production would provide a more reasonable quality of life and should result in reducing water rates.

Some of the reasons leading up to this shocking water rate proposal:

▪  Lack of CCSD reaction to the 40 percent drop in water sales revenue since February 2014 — almost two years ago!

▪  The rush to build the EWS before obtaining a consensus by the many necessary permitting agencies: “cart before the horse syndrome.”

▪  An overly complex and expensive, one-off, engineered EWS design versus a much lower cost, standardized product from a corporation such as GE Water.

▪  Nonconservative drawdown of reserve funds that could have put normal CCSD operations in jeopardy.

▪  Dependence on state and federal grants to support present and future planning.

▪  Bartle and Wells Associates’ assumption of an operational cost inflation rate of 4 percent instead of using the past five-year average consumer price index rate of 2 percent as an escalation limit.

A commercial company would be most likely be headed toward bankruptcy if it followed a similar path.

We do not want to replicate the Los Osos sewer scenario, but the CCSD should not have dug such a deep financial hole for Cambria citizens to fill. The CCSD should have been more conservative in its actions and more aware of changes in its operating environment.

It would be more helpful if CCSD leadership spoke directly to the public rather than through the BWA consultant and its public information officer.

The public deserves to understand how such a large financial shortfall occurred and, specifically, how the rate increases would be used to resolve the situation.

This story was originally published December 23, 2015 at 8:03 AM with the headline "Water rate study produces some startling results."