HomeMy WebLinkAbout6/15/2021 Item 7a, Schmidt
Delgado, Adriana
From:Richard Schmidt <slobuild@yahoo.com>
Sent:Monday, June 14,
To:E-mail Council Website
Subject:Item 7 agenda correspondence
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Hearing Item 7 – REGRESSIVE utility charging scheme
Dear Council,
It tickles me pink to watch our PROGRESSIVE city council, year after year, dig deeper into a REGRESSIVE scheme of
utility charges.
“What,” I ask myself, “are they trying to tell us about their politics?”
Slocity’s utility charges are the essence of REGRESSIVE UNFAIRNESS, charging the smallest consumers
proportionately MORE than the largest consumers, whose consumption puts the greatest demand on the municipal
resource financed with these charges. This is accomplished by two means:
1. An ever-increasing REGRESSIVE “fixed” charge attached to every bill.
2. The myth that water charges provide “conservation pricing.”
Here are examples (using 2012 rates):
A. Small conservation user: 2 units of water per month. This user pays $18.33 per “unit” of water. (Calculation: $23.31
fixed + 2x$6.67 unit charges)
B. Water Hog: 15 units per month. This user pays $10.25 per “unit” of water. (Calculation: $23.31 fixed + 5x$6.67 +
7x$7.77 + 3x$14.24)
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THE PER UNIT CHARGE FOR THE CONSERVATION USER IS NEARLY 80% HIGHER THAN FOR THE WATER
HOG.
Remedies.
1. Get rid of the “fixed” charge. We never used to have one. (Staff originally sold the council on a “fixed” charge by
saying it was “only $5 per month” and staff had no intention of raising it! Well, that surely worked out, didn’t it?) Fixed
charges are a current billing fad – fashion, not substance, and certainly not the way things need to be. They are
REGRESSIVE, UNNECESSARY AND UNFAIR.
2. Have a PROGRESSIVE method of charging for overall system operation costs. This basically means including system
costs in the unit cost, so those who use the most pay the most. Since one’s “fair share” of system costs mirrors one’s
share of system use, costs can be allocated fairly by assessing a share of costs proportional to use.
For example, the city knows in aggregate its system costs; it knows in aggregate how many units of water are consumed.
A computer algorithm can easily assign those costs per unit of water, and thus distribute them FAIRLY among consumers.
(Don’t let staff tell you this is too difficult. It’s not. It’s mere computer programming.)
3. Direct staff to develop a PROGRESSIVE and FAIR pricing regime based on the principle of “fair share” allocation of
costs rather than a same-charge-for-all-customers allocation of costs.
4. Strengthen conservation pricing with more tiers, and thus more conservation incentive. This is also an aspect of
PROGRESSIVE PRICING – the more one uses the more per unit one pays.
Sincerely,
Richard Schmidt
PS. Although it’s not a precisely accurate analogy, I like to compare fixed charge utility billing to the federal income tax.
The fixed charge is analogous to saying everyone pays a $12,000 fixed income tax, regardless of income, then some
percentage on top of that – if one makes more than $12,000. We would all agree that’s REGRESSIVE and unfair, but yet
– as we can see with the “conservation user” example above – that’s pretty much what Slocity does with its fixed utility
charges. (The “conservation user” uses $13.36 of water, yet is charged $23.21 fixed – more than the water charge – for a
total of $36.57!) Your current billing scheme is not a good one.
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