HomeMy WebLinkAbout6/6/2023 Item 7a, Schmidt1
Purrington, Teresa
From:Richard Schmidt <slobuild@yahoo.com>
Sent:Monday, May 29, 2023 1:25 PM
To:E-mail Council Website
Subject:Water rate problems
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May 29, 2023
Dear Council,
I am writing a week before your meeting on raising water rates so you have time to reflect upon the inequity and
fundamental wrongness of what staff’s asking you to approve, and to think about better ways to charge for water.
Let’s start with an anecdote. You and your friend just happen to pull into a gas station at adjacent pumps, and chat away
while you put 2 gallons into your car and she 14 gallons into hers. When you’re done, you discover that your per gallon
charge is almost double hers! You’re hopping mad.
Well, that’s exactly how the city’s water charges work: the light user which we’ll call the “conservation user,” is charged
almost double per unit of water as the profligate “water hog” user. We’re told by staff this is “conservation pricing”
designed to encourage less use, but obviously it’s not conservation pricing, but radically discriminatory pricing that
rewards water waste with lower per unit charges.
Let’s look at per unit water charges for four “typical” users:
• The “conservation user” who is able to get along on 2 units per month. This is likely a very thrifty conservation-minded
householder performing the conservation the city asks of her, or someone living in a small rental unit who is quite possibly
economically disadvantaged.
• The “low user” who scrapes by on 4 units per month.
• The “moderate user” with a family who consumes 8 units per month.
• The “water hog” with a large house, pool or spa, and likely something wasteful like a moss garden, who consumes 16
units and for whom cost is no matter.
Note the unit progression that doubles with each category: 2, 4, 8, 16.
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Under the rate schedule staff proposes you adopt, 2024 costs per unit per user are these:
• “conservation user” = $23.67 per unit.
• “low user” = $16.10 per unit.
• “moderate user” = $12.81 per unit.
• “water hog” = $13.11 per unit.
(Methodology for above: sum the per unit water charges per 2024 rate chart, add to “base” $30.25 and divide total by
number of units.)
This is Regressive pricing, not Progressive pricing. How is that sort of pricing in any way equitable? How does this
express the city’s desire that users be conservation conscious? Clearly there are major built-in problems in the water
pricing model being used.
This inverted pricing of water should be just as offensive to any thinking policy maker as the inverted charges at the gas
station were.
So how did the city’s water pricing get this far off base? The city used to just charge customers for the water they
consumed. Then a new fad in pricing got introduced, the fixed “base” fee. I recall when Carrie Mattingly, the utilities
director, came to the council with the “bright idea” of introducing a fixed fee in addition to the water charge. It was “just $5”
she said, and would not need to be raised from year to year. Once the camel’s nose was inside the tent, the fixed fee was
indeed raised every year till now staff proposes one that’s six times the promised “forever” $5 fee. In fact, the proposed
increase alone is more than the “forever” $5.
It’s the fixed $30.25 “base” fee that distorts water charges so that they harm the frugal and poor and bless the rich and
careless. So that needs to be dealt with, now, and not kicked down the road.
There are countless better ways to charge for water than the one we’ve got. I’ll suggest a few that occur to me, merely to
get some thoughts rolling.
First, there need not be any “base” fee at all. This is a current rate schedule fad, and it’s loaded with problems. (Just wait
for the blowback if the PUC enables the $60 monthly base fee our electric utilities are seeking.) We didn’t used to have
any base fee for water, and got along just fine. Charge people a fair price for what they use, and no more, and problem’s
solved. If those rates must be adjusted year to year due to consumption and cost changes, so be it; at least the rates will
make sense, which the current ones don’t.
However, there are certainly better “base” rate methods than the city’s fixed $30.25 charge. Here are a couple of ideas:
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1. A variable base rate indexed to how much water one consumes would promote Equity, fairness, and conservation-
mindedness. An example of how this might work: for the first unit, a $1 “base”; for the second unit, $1.50; for the third, $2;
etc., in this example using 50-cent increments for each additional unit of water consumption. The incremental per unit
allocations would be summed to find the “base” at any particular consumption level. Of course one would not go through
this math for every bill: a published “base” rate table would make explicit the “base” for each consumption level. So, for
example, for our four hypothetical users, this is how things would play out:
• “conservation user” $2.50 “base” producing effective unit price of $9.79 instead of the proposed $23.67 per unit.
• “low user” $7.00 “base” with effective unit price $10.29 instead of proposed $16.10.
• “moderate user” $22 “base” with effective unit price $11.78 instead of proposed $12.81.
• “water hog” $76 “base” with effective unit price of $15.97 instead of proposed $13.11.
Isn’t that a much more fair pricing regimen than the one proposed?
Such a system would restore progressive Equity to the water charges. I’m not suggesting the numbers above are the
correct ones but merely provide them as an example of how a better system could be designed. This would be relatively
simple to implement – staff knows how much they want from a base fee, they know how much water they sell, and should
be able relatively easily to allocate base wants to an indexed chart of incremental base increases for each increased unit
of consumption.
Such a system would, in other words, have a two-part unit charge, replacing the present arbitrary fixed “base” charge
unrelated to consumption that’s added onto bills. Thus all charges would be related to actual water use.
2. There are also very sophisticated computer-designed rate schedules one might call “dynamic” pricing since they
monitor system costs and consumption and at designated intervals allocate costs to customers in proportion to the
customer’s share of total system consumption, thereby setting rates. These can be programmed to achieve conservation
ends and thus promote city water conservation values. I once had a fascinating conversation with a fellow who designs
such systems after he saw an article I’d written and called me to talk about it. I don’t pretend to understand the details of
this, but am aware there are talented programmers out there who know how to make a dynamic system-wide equitable
rate schedule work.
So what’s the point of this letter?
I want to raise the consciousness level of the council about the evils of the current and proposed water charge system,
especially since rate-setting is new to two of you.
And I’d encourage action. A good action, in my mind, would be
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1. to reject the proposed water rate changes,
2. give staff direction to return in 90 days with a rate system that corrects the Inequity and anti-Progressive features of the
present system and which also promotes genuine Conservation Pricing, and
3. continue present water charges in the interim.
This is doable despite the 10,000 reasons staff is likely to tell you it’s not. If you agree with my premise the current system
is wrong, you must lead and direct staff.
Thank you,
Richard Schmidt