Poway's 47%

Dear Poway Homeowners,
You are getting screwed. Bigtime. And no, I am no referring to the PUSD bond fiasco. It's your sewer bills.

OK, you are not ALL getting screwed. Around 47- 50% of you are are paying substantially higher sewer rates than other Poway sewer users pay. It's been that way for more than 30 years. Maybe 40.

It is kind of a well kept secret. If you were to search The City of Poway's website, you would find a link to the City's water/sewer rates and fees , but you won't be able to find the real sewer rates for single family residential listed anywhere on the City's webpage.

Poway water/sewer customers have 4 line items on their bills: 1) water basic service, 2) water consumption, 3) sewer basic service and 4) sewer consumption.  The basic service fees are a fixed fee, based on the size of your water pipe and/or your type of service (residential, commercial, industrial, etc). The water consumption charge is based on how many units of water you consume. The sewer consumption charge is much more complex. And convoluted.

Most properties in Poway don't have sewer meters. The sewer consumption is calculated a bit differently for each category of user ( residential, multi-family, commercial, etc.) For example, multi-family housing are pegged for sewer flow equal to 85% of their water use for that period. Commercial properties sewer consumption is figured at 90% of their water consumption. Single family residential properties sewer use is calculated at 85% of the average from the lowest use during the 3 previous winter periods.

In the charts below you can see that the sewer rate is $3.16/unit  for apartment houses, churches and schools. It varies from $3.16 to $6.40/ unit  for commercial and industrial customers.

For single family residential customers, the City actually uses a tiered charge pricing format instead of a rate. The charges increase as use increases, sortof. Look at Tier 2. The house that uses 6 units, and the house that uses 12 units both are charged $40.98. There was twice as much flushing and showering going on in the house that used 12 units, but they paid the same fee as the house poured half as much water down the drain.

For some reason, the city calculates everyone's sewer commodity fee as a rate, except for the single family residential category. The true rates you pay are hidden in the City's chart. I've calculated the actual rates in the chart below. The results are a bit surprising.

The rates in the chart vary from $1.76/unit to $23.23/unit. If someone uses more than 57 units, their rates are even lower. If someone uses 0 units of water, they still have to pay a sewer charge of $23.23.
My sewer use is calculated at about 10 units.  I pay $40.98, which comes to about $4.00/unit. The person who uses 51 units pays just under $2.00/unit. How can it be fair to charge higher rates to those who use less? What a nice break for those who consume a lot of water!

How did it happen that almost half of the residential single family homes are subsidizing the other half? Originally, everybody paid the same fixed sewer charge. Then, the fixed sewer charge was tiered to make it more fair. Then, a fixed charge was separated from the tiered charge. So now, we pay a fixed charge (basic service fee) and a tiered charge (consumption fee). As sewer charges increased, people who used very little winter water, got hit with large, disproportionate bills. In 2006, the City paid a consultant to study the sewer rates. The consultant (RFC) found that if the City used a uniform rate, ratepayers in Tiers 1, 2 and 3 would enjoy a savings of 22% to 44%. Those in Tiers 4 through 7 would pay 2% to 51% more. Guess who complained and convinced the council not to charge a uniform rate for the sewer?

Funny thing,  those very same folks went apoplectic about 2 years ago when the city imposed a multi-tiered  conservation water rate. The difference between that water rate structure and the current sewer charge structure is that with the conservation water rate structure, everyone paid the same rate for their first x number of units of water, and the same rate for their next y units of water, etc. People were only charged higher rates for the water usage beyond each tier.  The people who used a lot of water said it was unfair. The council heard them, and changed the water rates back to a uniform rate. Well, almost uniform. Now, everybody pays the same rate for their first 199 units and more for their next z units. I never really got why everyone screamed that it was unfair  if we did not all pay the same rate, but then they were OK with charging people more for their 200th unit and beyond. Was it about fairness or advantage?

Speaking of advantage, at a council meting and at the recent candidate's forum, Councilmember Cunningham proposed that the excess money in the sewer fund be used to lower water rates. Really? First the City overcharges the low water user on their sewer bills and then the City wants to take the extra money to lower the water bills of the big water users who are no longer paying conservation rates. Freaking unbelievable.

I have been complaining about the unfair sewer rates for years. Every councilmember is aware that the low water users are being screwed. All of the councilmembers are OK with it, including the one who puts a quote from Ghandi on her emails. Not one councilmember has made any effort to change the way Poway charges for the sewer.  It certainly says something about the way "they serve the community" to me.  I have no respect for those who would charge the low water users more per unit just because they can, and because it pleases their more advantaged friends.  The situation will not change until enough of the low water users become more aware and make enough of a ruckus to demand the change. Will you help make a ruckus?

Drip, Drip, Drip

It's like water torture. Poway style.
To be more specific, Poway water-and-sewer-rate torture.

On Monday I got my latest water bill. $145.96 for 9 units of water! Nine lousy units of water.
That is an average of $16.22 per unit of water. That's just ridiculous.
Last March, my bill was $136.19 for 10 units of water.  I'm using 10% less water than last year and paying 19% more for it. It just sucks.


What's really bad is that only $27.36 of my bill is for my water consumption.  $118.60 is for fixed fees and sewer consumption.  For 9 lousy units of water and even fewer units down the drain.

I was really PO'd because my sewer use should have back in Tier 2 instead of Tier 3. But there on my bill was a fee $76.25 fee for Tier 3 sewage use.  It took several phone calls over 4 days, but I finally got Donna Goldsmith to call me back and explain that the computer didn't calculate my sewer use correctly. Mine and lots of other people's. So, yeah, I'm back in Tier 2 now. And I can deduct $25.60 from my bill.

What's really crazy is the huge jump in rates from Tier 2 to Tier 3. Somebody using 12 units of water is in Tier 2 and pays $50.65.  If they have company and let them take showers, that could bump them into Tier 3. That will cost them $76.25. That is a 50% increase over Tier 2 and it will cost them $25.60 more for each of the next 6 water/sewer bills. Who made up these crazy rates? And who approved them?

I've asked all 5 councilmembers to take another look at these insane sewer rates, but so far, not one council member has done anything about them. They have, however, voted to roll back planned water rate increases for high end users. That tells a lot about their priorities.

I did some furious googling during one of my sewer rate rage episodes and I came across a previously unknown website called California Urban Water Conservation Council. According to their website,

CUWCC is a partnership of water suppliers, environmental groups, and others interested in conserving California’s greatest natural resource - WATER.

The California Urban Water Conservation Council was created to increase efficient water use statewide through partnerships among urban water agencies, public interest organizations, and private entities.  The Council's goal is to integrate urban water conservation Best Management Practices into the planning and management of California's water resources.

A historic  Memorandum of Understanding was signed by nearly 100 urban water agencies and environmental groups in December, 1991. Since then the Council has grown to 389 members. Those signing the MOU pledge to develop and implement fourteen comprehensive conservation Best Management Practices (BMPs).

I was surprised to find out that Poway was a member of CUWCC. I mean, Poway's sewer rates are an abomination. They aren't even structured as rates.  The difference between Tier 2 and Tier 3 is a ridiculous 50% increase, but the increase in the the higher tiers is a lot more gentle. Poway's sewer rates are designed to extract the greatest return from low end users, not to foster any kind of conservation. In fact, when Poway's sewer fees are converted to rates, the top tier pay less than it cost the city to have their sewage treated at Point Loma. The lower tier rates are many times higher than the rate of the higher volume users.

All the members of CUWCC signed a memorandum of understanding. They agreed to implement some BMPs (best management practices). One bmp details how members are supposed to charge for sewer service:

Part II- Retail Wastewater Rates A. Implementation

This section applies to Water Agencies that provide retail sewer service. Water Agencies that do not provide retail sewer service shall make good faith efforts to work with sewer agencies so that those sewer agencies adopt conservation pricing for sewer service.

Conservation pricing of sewer service is also characterized by one or more of the following components: rates in which the unit rate is the same across all units of service (uniform rates);

rates in which the unit rate increases as the quantity of units purchased increases (increasing block rates); rates in which the unit rate is based upon the ong-run marginal cost or the cost of adding the next unit of capacity to the sewer system. Rates that charge customers a fixed amount per billing cycle for sewer service regardless of the units of service consumed do not satisfy the definition of conservation pricing of sewer service. Rates in which the typical bill is determined by high fixed charges and low commodity charges also do not satisfy the definition of conservation pricing of sewer service.

As I stated before, Poway does not charge for sewer service in unit rates, so I had to convert their tier fee structure to unit rates before considering if Poway was implementing the bmps. It is pretty obvious that Poway doesn't have uniform rates, nor does the unit rate increase as the quantity of units purchased increases. In fact, the unit rate tends to decrease as the number of units purchased increases. Poway's rate structure gives a discount to people who use more sewage water. 

I asked Steve Didier, Director of Administrative Services, whether or not Poway's sewer fees were in compliance with CUWCC bmps. Mr. Didier said that Poway complies because it uses the third criteria:

rates in which the unit rate is based upon the long-run marginal cost or the cost of adding the next unit of capacity to the sewer system. 

I went googling for a definition of "long-run marginal cost".
Here's one from wikipedia:

Long run marginal cost (LRMC) refers to the cost of providing an additional unit of service or commodity under assumption that this requires investment in capacity expansion. LRMC pricing is appropriate for best resource allocation, but may lead to a mismatch between operating costs and revenues.

In long run equilibrium, the LRMC=Long run average total cost (LRATC) at minimum LRATC.

LRMC is the minimum increase in total cost associated with a change in one unit of output when all inputs are variable and when input combinations are optimal before and after the change.^[1] LRMC is the slope of the LR total cost function. The shape of the LRMC curve is determined by economies of scale. SRMC = LRMC at the long run cost minimizing level of output.

That sounds like a lot of economics mumbo jumbo. Here is a definition from WaterUK that is a little easier to understand:

long run marginal cost (LRMC)

The additional cost of meeting extra demand for water (or sewerage). In the long run this will include both operating and capital costs. Companies have estimated figures for water both on a steady demand basis and a peak demand basis, and these are published by Ofwat in their annual tariffs report. Ofwat's view is that companies need to refer to LRMC in setting tariffs and charges for bulk supplies.

Long run marginal costs include the cost for treating the sewage now, and any costs for new capital outlays. Suppose Pt. Loma had to build a new plant because it couldn't handle the amount of sewage going through it now, that would be a capital cost that would likely be transferred to the ratepayers. And if they charged different rates for flushing at different times of the day, I suppose that would be a "peak demand" event. But I don't see how we could even measure that because we don't even have sewer meters in the first place.

So, armed with a lot of economic buzz words, I took a fresh look at Poway's sewer rates. Poway Ordinance 666 (oh- it surely is a beast) lays out the water and sewer fees and charges. The paragraph on the sewer charges is titled "commodity rate", but there are no rates listed in the ordinance, only fees/charges.

I converted the fees/charges to a "rate" by dividing the charge by the number of units used.  For example, the charge for Tier 2 (6-12 HCF) (note: HCF=unit) is $50.65. That means, someone who (by the city's guesstimate) uses 6 units pays a  $50.65 commodity fee and someone who uses 12 units (twice as much) also pays $50.65. To find the rate for each, I divided $50.65 by the number of units used. The 6-unit user is paying $8.44 per unit and the 12-unit user is paying $4.22 per unit, half as much as the 6 unit user. In this example, the user who uses twice as much pays half as much as the frugal user. The CUWCC bmps are supposed to promote conservation. Can you figure out how charging the person who uses 12 units half as much per unit as the person who uses 6-units encourages conservation? I sure can't.  And why give the person who uses 12 units such a discount when the rate for the person who uses 13 units jumps back up to $5.87 per unit.
The rates are just crazy. Here is a graph:

I don't think Poway's sewer fees comply with the CUWCC bmps. Even if Poway re-calibrated the rates to smooth out the crazy jumps, the trend is to charge less per unit for the people who use more sewer water. The long-run marginal cost actually has a tendency to raise the costs for additional units of production, or in this case, of sewage being treated. So how does Poway justify lower rates for big users and higher rates for the frugal users? I asked Steve Didier that question in an email:

Steve, the sewer commodity charge are not listed as unit rates. They are tiered fees. Convert them to rates and they are out of compliance with the bmps. The unit rate of the lower tiers is higher than the unit rate of the higher tiers. Does Poway get a discount for adding more sewage to the system?

Chris

Steve's response:

No, we don’t.  But remember we’re the middleman in the equation and we do recover our costs from various customer types in different ways.  For example, we charge higher sewer rates to certain commercial customers, like laundromats or drycleaners, considering a higher sewer treatment cost based on the type of business.

For residential customers, the increased cost at each sewer tier is based on the long-run marginal cost of adding the next unit of capacity to the sewer system.  Our sewer rate model recognizes that as water usage goes up, less of that additional water use is returned to the sewer.  This is controlled in our rate model with the sewer cap, which is what creates the lower per unit cost to which you are referring from tier to tier.  Beyond 51 units of water use (tier 7) customers are not charged any more for sewer service because it recognizes that anything over that is likely not being returned to the sewer at all (i.e., landscape use).  But at each higher tier to that point they are paying more, which meets the criteria of the CUWCC BMPs by charging for the marginal cost for adding the next unit to the system.

The City conducted a study in 2007 that validated our sewer rate methodology, which was vetted in an open council meeting and approved by the City Council.  If you would like a copy of that report please request a copy from the City Clerk as a public records request.  Take care.

STEVE DIDIER

Director of Administrative Services

City of Poway

858-668-4413

I don't buy it. If I run my shower longer, does less water end up in the sewer? The sewer commodity charge is based on winter water use. In a wet winter, wouldn't everyone have their irrigation off? And re-calculating how much ends up in the sewer is not a long-run marginal cost. It is a re-calculation of the winter water use. Not that I don't have issues with that too.

I'm usually in Tier 2 unless we have a very dry winter. Then the extra irrigation bumps me up to a Tier 3 which costs about $150 more per year than being in Tier 2. My own experience is that your sewer rate methodology sucks. It is not valid in my case. My last 3 lowest winter water use were 8 units (2007-2008); 10 units (2008-2009) and 9 units (2009-2010). Yet for the last couple of years I have been assigned to Tier 3. The averaging method makes a dry winter carry over for the next 3 yrs or so. The methodology supposedly compensates for that, but it sure doesn't in my case. The last last couple of years, I have paid for putting more water into the sewer than I received  coming in to the house as fresh water. Poway's sewer fees are structured to extract as much revenue as possible from smaller users. There is no conservation incentive in the rate structure at all. 

Are You Listening?

There were lots of goings on last week in the ol’ Poway corral.

First off, Rod Gould unexpectedly resigned. He is going to be leaving Poway in January to take the city manager ‘s job in Santa Monica. Gould has been Poway city manager for 4 yrs.  That's not very long by Poway standards (Jim Bowersox served for 24 yrs), but probably only a few years shy of the average city manager’s tenure. Gotta wonder just how much of Gould’s decision was a desire to get away from the rancor and contentiousness of Poway and how much was a desire to do something in a bigger city and get paid a lot more for it. Gould is a consummate professional. We will probably never know.

Betty Rexford was elated at the news about Gould’s leaving. Apparently she and Gould didn’t get along too well. I think there may have been some words between them about this city not being big enough for both of them. She’s still standing, so I guess that’s a win for her.
Last week, Rexford launched her website, therealbettyrexford.com. It is Rexford’s effort to get her side of the story out. As you might expect, the Poway Posse aka the recall-rexford folks responded to the rollout of her website by rolling up their recall tent. Not. You can read their responses here, but I suggest you avoid it, unless you have a perculiar nostalgia for your junior high years.

Last week was also the performance of Steve Vaus’ Carols by Candlelight. That’s his annual “for charity” gig. But since Vaus’ production company is a for profit company, we won’t know how much of the donated money and ticket revenue from Carols by Candlelight went to coddle the artists and line Vaus’ pockets and how much of it actually went to charity.  The recall stampede has been pretty quiet lately. I am not sure if that is because Vaus has been otherwise occupied or if they just ran out of steam.  Vaus hasn’t sent out a tweet since Nov 10.  No new republican leaders have stepped forward this week demanding that Rexford resign right this very minute.

Vaus’ claim that other houses burned to the ground during the Cedar Fire because a fire crew  was diverted to “babysit” Rexford’s house has been getting a lot of pushback.  I must say, the “facts” about the fire presented on the realbettyrexford site here, here, here  and here are pretty compelling. The documents on Vaus' site don’t back up his claims, they just show that a fire truck was sent to Rexford’s neighborhood to mop up after the fire. No document that Vaus provided shows that Rexford called and made any demands to send a firetruck. No document shows that any other house burned down due to a truck being sent to the Creek Rd neighborhood to quell spot fires.  Although not backing down or apologizing for what sure seems like a freakin’ distortion of events, Vaus (and his friend, Jack) are quick to point out that the issue of Rexford costing us a lot of money remains.

Do whatever you can to hide the real issue. Betty Rexford is unfit to serve and her repeatedly poor ethical choices have cost the city almost 1/2 a MILLION dollars. Does this not even bother you Gerold and Chris? You would rather put up with someone who is clearly unfit to serve rather than let anyone replace her?

So, maybe another house didn't "burn" as a direct result of her having trucks babysit her home, but does that make it any less salacious that she was able to have her own personal fire brigade stationed at her property and available to her beck and call?

Yes, it does bother me that the court case cost the city almost $500,000. I don’t agree with the recallers that Betty, and only Betty, was the problem that led to the court case. Nor do I agree that removing her from office just before her term expires and replacing her with an appointee is gonna fix things. But, consider the mathematics of the settlement. There are about 50,000 people in Poway. This case cost us about $10 ea. Or about $25 per household. Since January, I have been bitching about something that is costing me and many other Powegians about $50 per bi-monthly billing cycle. That is about $300/yr and it has been going on for years and will continue to go on until the council takes some action on it. I’m talking about my sewer consumption rates also known as “a variable commodity charge”. I’ve blogged about it here, here, here, and especially here. I’ve also complained about the fixed fees but that is another whole blog. Right now I am paying $72.23 for using 13 units of sewer water.(even when I only use 10 units). That is over $6/unit. Customers who use over 51 units are paying less than $2.29/unit. It isn’t fair, it isn’t just, it doesn’t comply with the best management practices of cities that have joined together to promote less consumption. Why should those who dump less water into the sewer system be paying a higher rate?


Tonight, the council will take another look at the water rate increses that went into effect this summer. The GVCA (Green Valley Civic Assoc) has complained that the rates aren’t fair and that some people will be paying more than it costs the city to provide the water.  Well, hello, isn’t that what I have been saying about the sewer rates for almost a year now? Can anybody hear me?  At least with the water rates, everyone is paying the exact same rate for the same amount of water purchased. Not so with our sewer rates. Those who buy more pay less. So how is it that GVCA got the council to bring back the water rates, but my complaints about the unjust and unfair sewer rates have been completely ignored?

Not a single councilmember has stepped forward to bring back the unfair sewer rates and put it on the agenda. In fact, Merrilee Boyack is the only council member to even respond to my many emails. Ms Boyack said maybe the council will look at it in a couple of years. A couple of years, eh? In a couple of years, that $300 extra that water-wise Powegians are paying each year is going to start adding up. It makes the Rexford settlement look like chump change.

Betty Rexford has also spoken in favor of rehearing the GVCA call to roll back the water rates to a flat rate. My request to rehear the sewer rates? She has done nothing.  Here is the issue where I am in total agreement with the recall folks. Betty Rexford has not been doing a good job of representing all of us.  But I’m not looking to replace Rexford with an appointee chosen by the council. I want the voters to replace her with someone who will listen to everyone in this community, not just the GVCA.

As for Higginson, Kruse and Cunningham, I haven’t heard a peep out of them about the unfair sewer rates either. They all live in north Poway and are pretty much tethered to the GVCA, but, uh, don’t you guys represent all of us? The unfair sewer rates  are not a north v south issue. The people who are getting ripped off are the ones who don’t use a lot of water in the winter months.  They are paying up to 10 times the sewer rate of the people who are putting a lot of water down the drain.

To be fair, most of my complaints were sent to the council before Carl Kruse was appointed.  So, here is your chance Carl. At tonight’s meeting, I am hoping you will ask to bring back the sewer rates and change them so that everybody pays the same rate for their sewer use. Not the same fee-  the same rate-  for each unit of water put into the sewer pipes.  Are you listening, Carl?  


Is anybody listening?