Water prices in San Diego again raise hackles at NR&C meeting
Posted by George J Janczyn on March 23, 2011
What drew me to the San Diego City Council’s Natural Resources and Culture Committee meeting today was a report on “Water Budget Based Billing” on the agenda.
This seemed timely because the price of water in the city of San Diego has lately been attracting more media attention (again). City Councilmember and mayoral candidate Carl DeMaio has been energetically spinning a proposal to cut water rates across the board by 15%, saying that the Public Utilities Department (PUD) management has room to tighten its own belt. Criticism also appears in a ‘people use less but pay more’ story the Voice of San Diego just published highlighting a woman who made a concerted effort to conserve water and has only a higher water bill to show for it.
Elsewhere people are calling for water rates that penalize waste and reward conservation while at the same time insisting that prices should only reflect absolutely necessary costs–not necessarily compatible goals. And comparisons are drawn with other water districts with lower rates–ignoring the fact those districts may import proportionately far less water than San Diego and have very different cost structures.
Back to the meeting. The only printed material distributed for this agenda item was a September 2010 memo from Mayor Sanders to the City Council stating that an expanded research effort would be undertaken to determine the feasibility of implementing a water budget billing scheme (inspired by one in place to our north at the Irvine Ranch Water District). That was the background.
So it seemed that some interesting data about what has been learned might come out at this meeting.
PUD Assistant Director Alex Ruiz gave a brief presentation that repeated what was in the memo, saying that the department now plans to issue an RFP for a technical expert to lead a project that would create a water budget proposal by the end of the year. That was about it. Councilmember Sherri Lightner asked if there is a written report on the data gathering to date, and there wasn’t, although Mr. Ruiz said he could bring something to the next meeting if desired. I don’t think anyone was pleased that a detailed and written report had not been prepared.
Lightner also asked about a cost of service study that had been anticipated for this fiscal year but it turned out one is not being done, nor is one intended for the next fiscal year. Apparently a cost of service study is an option for PUD in the event of certain budgetary issues, but the department decided there’s no need for it at this time. The mayor’s spokesman interjected that the lack of a cost of service study should therefore be seen as good news.
Mr. Ruiz said that PUD has to juggle many factors with water rates and that they’re sensitive to low-use and low-income users, but that the goal is for all groups to pay an equitable proportion of the costs. One example of the difficulty in achieving that, he said, was the fixed base fee (for infrastructure and maintenance) which is the same for everyone regardless how much they use, meaning that low water users pay proportionately more for infrastructure and maintenance than larger users. Other schemes for distributing those costs, however, also tend to have inherent flaws that seem unfair to certain users.
Councilmember Carl DeMaio demanded that PUD make a commitment to a water rate structure where “if people use less water they’ll pay less.” He then revealed where he came up with his campaign theme that water rates can be reduced by 15%. Apparently there was an earlier committee or city council meeting where DeMaio had posed a question about PUD’s ability to maintain service levels even if conservation resulted in a 15% reduction in demand with consequently lower revenues for the department, and Ruiz had responded that the department would be able to get by with that.
“I can even show you in writing where you said that!” exclaimed DeMaio.
DeMaio’s theory that lost revenue from a 15% conservation rate is the same as a 15% cut in water rates that the department can absorb may be arguable, and it conveniently ignores another issue: if there has already been lost revenue due to a 15% reduction in water use, the department is already having to deal with that. So DeMaio’s plan would burden the department with yet another 15% cut. That makes 30%.
To be continued at the next meeting on April 20.
This all reminds me of something I wrote about getting city residents to develop a permanent mindset to conserve water in a 2009 post:
Increases are needed to offset infrastructure and delivery costs, but higher prices can be imposed to control demand as well (David Zetland at Aguanomics is a strong advocate for that approach). That’s where I think we’re headed. If we do price ourselves into appropriate water behavior, though, I hope it’s done equitably. Up north, the Irvine Ranch Water District has a well-considered approach that meets my fairness test. Their rate structure defines a typical household’s size and water needs, then has tiered pricing in low-volume / base rate / inefficient / excessive / wasteful categories. If one’s household is greater in size than the assumed model, one can apply for a variance to accomodate the extra need and avoid being penalized. I would like San Diego to follow suit with such a plan, but I predict our water department would resist having to do more needs analysis and processing of the inevitable variance requests, a great deal of work to be sure.
Of course artificially setting prices to control demand opens another can of worms. For one thing, there’s the city ordinance that requires water rates (as opposed to the fixed water base fee) to only pass along what the city has to pay to purchase the water (remember most of the city’s water is imported via the County Water Authority and the Metropolitan Water District). Also, if an artificially high rate for water gluttons is charged, where does that money go to in the PUD budget and how can it be used? Lots of details and questions, not many answers.
On a possibly related note: I consume much less gasoline than I used to but it sure costs me a lot more now.
[Late update: UCAN’s response to this water rate development]