In Defense of Tiered Water Rates

Last month I attended the water/sewer rates workshop. (You can read my initial reaction here.) Poway is now in the process of revising their tiered water rates to a simple 2-tier system for single family home water customers. Everyone who uses 0-199 units of water will pay $4.08/unit and folks who use 200+ units will pay $5.74/ per unit for any units over 199 units. So, for all practical purposes, Poway will have a flat rate for water, with the exception of a few extra gigantic water hogs.

I didn't speak about the water rates at the hearing. I addressed the inequities and abominations in the current tiered sewer fee structure. The staff told the council that they didn't have time to address the sewer issues. But because the sewer fund is overfunded, they recommended dropping fees 13% across the board. It speaks volumes about our city that the council has addressed and adjusted the water rates multiple times in one year, but cannot find time to fix the sewer rate structure.

Here is what the current and new sewer fees for single family residential look like:

The sewer fees (the chart says "rates" but it is incorrect) are lower, but all of the anomalies and inconsistencies remain. See the jump from Tier 2 ($44.07)to Tier 3 ($66.34)? That's still a 50% increase. A single glass of water from a customer who normally uses 12 units could push them into Tier 3 where they would have to pay an extra $133.62 ($22.27 x 6) per year.

And the rate is still lower for the big users. Someone who uses 44 units pays $2.23 per sewer unit and someone who uses 9 units pays $4.90 per unit. Why? Because the council is catering to the big winter water hogs.

There were few interesting or unexpected happenings at the workshop. Mayor Don Higginson cut off speakers he disagreed with with an abrupt, "Your time is up," and then let speakers he agreed with ramble on and on, and even allowed George Andreos to jump up out of his chair and speak even though he hadn't filled out a speaker's slip.  Not unexpected.

There was one unexpected moment. Council member Jim Cunningham asked the consultant how many other cities and water agencies were reverting back to a uniform unit rate for water. The consultant indicated that not a single one has. Almost all still have tiered water rates. So Poway will be the first. Technically, Poway still has tiered rates, but the second tier starts at the extreme water hog level of 200 units, so it only affects a very small percent of users, and only after their water use exceeds 199 units.

I'm in favor of tiered water rates. I know a lot of people were aghast that somebody would be charged more than someone else for their water. What's funny is that some of these same people were, until very recently, getting a discount rate for their water.  They seem to have a huge sense of entitlement. When they are being subsidized, that's OK, but when the reverse happens, it is the end of the world as they know it.

While some people call the old rates a "subsidy" to low water users, I prefer to call it an "incentive" for conserving. We have had incentives for buying water saving devices like low-flow showerheads and toilets. Tiered rates are another incentive for conserving water.  Our SDG&E gas and electricity rates are structured the same way as our tiered water rates. I know that when I get my bill, I look to see if I have exceeded the baseline amounts. If I have, it is a reminder to renew my conservation efforts.  This system provides benefits to the conservers and also to those who need the available resources to keep their businesses and industries humming. The same principles can be applied to our water rate structure. If conservation is incentivized,  more water is available for those who need large amounts of it. Poway's return to uniform water rates eliminates the incentive for conserving.

The new rates will require a Prop 218 vote. One more than half of us would have to send in a written protest. That's unlikely to happen, but the city has to pay to send out the notice anyway. In the notice that I received, there is an example of how the new rates will affect someone who uses 25 units of water and is in Tier 3 for sewer. I decided to take a more in-depth look to see what the new rates will mean.  Because I have water records (from Apr/May 09 to Feb/Mar 2010) for the city council members  I decided to use that data and compare what they would have paid under our current rate structure and what they will pay under the new rate structure.

The only problem is that none of our current council members live on small RS-7 sized lots like the ones in south Poway. So, I used the data I had from some south Poway council candidates for the June election, just so people could see how the rates will affect people who live in south Poway too.

Percentage-wise,  new water rates will hit small water users particularly hard. The increase in rates is about 25-28%. Large water users will see rates go up about 14-16%.

The fixed water fee will also increase from $26.00 to $28.00 per bi-monthly billing cycle. This fixed fee is the same for every user. It is like a "flat tax". Supposedly, it is to pay for some items which are not a function of how much water each customer uses. There is no such category in the Poway budget. There is no list or accounting of items that go into the fixed fee. In fact, all the money collected on our water bills for water go into the same pot and from that pot, all water related expenditures are subtracted. There are some items on that list which are not exactly consumption related, like, paying off the bonds for city hall, or paying the salaries and pensions of the city managers office. These items are traditionally paid for from property tax revenue, but have been shifted more and more to our water and sewer bills lately. We don't pay the same amount on our property tax bill for these items, so I am not impressed with the argument that we should all pay the same for them on our water/sewer bill. And to the argument that the fixed fees are an "access" fee, well, if we all pay the same access fee, then we should all have access to the same amount of water. And the right to sell that access to someone else if we aren't using our fair share of access.

As a reminder to how much the fixed fee affects the cost per unit of water, I have added the fixed fee in and divided by the total number of units to find the true per unit cost of water for each council member or candidate listed above. Here are the results:

The true cost of water is $4.41/unit for the highest volume user, Jim Cunningham (434 units).  The guy who used the least amount of water, Roger Willoughby, pays $5.58/unit. That's more than a dollar more per unit than Cunningham pays. Another reason I favor the tiered rates is because it helped to mitigate the impact the fixed water fee has on the low volume users. Now that the tiers are gone (rates effective in January 2011), the low volume users will be paying more per unit for their water again. Until we see some change in the council makeup, the low volume users are going to continue to pay an unfair share of the costs for their water and sewer.