HomeMy WebLinkAbout23 - Conduct a Proposition 218 Public Hearing and Consider a Water Rate Increase - CorrespondenceReceived After Agenda Printed
November 19, 2019
Item No. 23
November 19, 2019, Council Item 23 Comments
The following comments on an item on the Newport Beach City Council agenda are submitted by:
Jim Mosher ( iimmosher(a)-yahoo.com ), 2210 Private Road, Newport Beach 92660 (949-548-6229)
Item 23. Conduct a Proposition 218 Public Hearing and Consider a
Water Rate Increase
I notice that while the need is said to be for a 7.4% revenue increase each year for the next five, in
every instance illustrated in the previously -shown slide from the rate study, showing what I assume
to be the first-year impact on bills (page 23-36 of Tuesday's agenda packet -- Attachment D
Presentation), each of the bills shown increases by less than 7%. This implies someone other than
the residential customers illustrated in the slide are picking up the slack to bring the overall
revenue increase to 7.4%. It's not immediately obvious from the rate study which class of
customers will be doing that.
As to the rate structure itself, I appreciate there is no perfect and manifestly equitable method, but I
hope that in future rate adjustments the fact will be better appreciated that the size of the
infrastructure that generates the fixed costs is based not on potential demand (as manifested by
meter size — on the assumption that meters will be operated full bore), but rather on historical
actual demand from the actual users. That should lead to closer scrutiny of whether the fixed costs
are being allocated where the demand necessitating them is actually coming from
In that regard, it seems intuitive that some classes of users with the same meter sizes might create
quite different water demands. In that regard, the June 27, 2019, Finance Committee presentation
contained a Slide 18 (page 27 of 95) showing "Meter Sizes [by] Customer Class" that I can't find
anywhere else. It would have been helpful if it were possible to fill in the number of HCF billed to
the meters in each box shown in that slide during some typical target year, and include that in the
study. One could then deduce what their average daily use of each size/user class is. That is, if a
"multi -family" or "commercial" 5/8" -meter uses a significantly different amount from a "single family"
5/8" -meter (a question of interest since we are being asked to drop the multi -family surcharge),
and, more generally, whether the ratio of use between, say, 5/8" and 1" or 2" meters matches the
ratios Raftelis has assigned to them.
In addition, the capacities being ascribed by Raftelis to some of the larger meters differ
substantially from those ascribed to the same -sized meters by Red Oak in our previous study in
2009. This is puzzling since they both seem to claim to be using the same AWWA Manual.
Even if maximum meter capacity is an accurate measure of average actual use (which I doubt),
since we have only 4 ratepayers with 3/4" meters, it is hard to see why the 30 gallons per minute
capacity of a 3/4" meter is being assigned to the 16,545 ratepayers with 5/8" meters, when the true
capacity of a 5/8" meter is limited to 20 gpm. Raftelis' assurance that using the 3/4" capacity for
5/8" meters is "industry practice" is not convincing to me. It seems that by the logic of the fixed cost
allotment (based on meter size rather than observed use) the many 5/8" meter customers are
being assigned a usage level they could not even theoretically be using.
Finally, the Council should be aware of the recent California Supreme Court decision in Plantier v.
Ramona Municipal Water District, 7 Cal. 5th 372. As I understand it, it establishes that Proposition
218 hearings do not insulate service providers from later challenges as to unfairness of the rate
structure as applied to individual ratepayers.