Phillipsville Community Services District's newly hired contracted operator, Hank Bernard, presented the board of directors with an entirely new proposal for a tiered water rate structure at a special board meeting last Thursday evening, Oct. 10.
Before the presentation the board voted unanimously to approve hiring Bernard's company, Hank Bernard Environmental Consultants, as their water system's operator. Bernard's firm is also the contracted operator for the Weott Community Services District, among other public and private water providers in Humboldt County.
A previous proposal for rate changes was withdrawn by the board last month when directors discovered that they had not allowed sufficient notice to the public under California Proposition 218, the law that sets requirements for how public agencies can increase fees, assessments, and taxes.
That proposal, prepared with the advice of the California Rural Water Association, created a storm of protest from Phillipsville residents because it called for substantial, and in some cases huge, increases in rates, in an attempt to create enough reserves to cover depreciation and eventual replacement of the entire water system.
While this method of calculating rates is common for public districts, Bernard takes a different approach, adding only the cost of improvements that need to be done within the next five years to the regular operating costs.
In addition, his calculations are based on what his business actually pays for supplies, equipment, and labor. For example, Bernard factors in the cost of chlorine based on the bulk rate he receives as the operator of multiple water treatment systems.
"We're not setting out to make a million dollars; we're just trying to pay the bills," Bernard said.
Like the previous proposal, Bernard's version - which he characterized as a "rate adjustment," not a rate increase - calls for tiered rates, with the cost of each billing unit of water (100 cubic feet, the equivalent of 7,480 gallons) increasing as the customer uses more water.
One significant difference is that the new proposal will allow 1,000 cubic feet of water as part of the base rate charged each customer each month regardless of how much or how little water the customer actually uses.
Charging a base rate that included no water garnered more public protest than any other part of the earlier proposal, board members said.
Furthermore, Bernard's proposal establishes base rates and the amount of water use in each rate tier according to meter size.
Meters for each connection should be sized according to the California Plumbing Code, a state law that all public districts must follow, Bernard said.
Minimum meter sizes are based on the number of "water fixtures," such as showerheads, toilets, sinks, dish- or clothes washers, hose bibbs, and lawn sprinklers on the customer's property.
A customer who uses large amounts of water may find it more cost-effective to install a larger meter than the minimum size required because the new proposed rate structure allows more water use in each tier.
On the other hand, the owner of a larger meter must pay a higher base rate every month regardless of how much water is used, and the cost of water per billing unit is higher in each tier.
These rates will cover regular operating costs plus the expected cost of capital improvement projects to be completed during the next five years.
To create reserves to cover contingencies or future major projects, customers will also be charged a monthly "capacity fee" of 18 cents per 100 cu. ft. with a minimum charge of $1.80 per month for the 1000 cu. ft. included in the base rate.
PCSD's office assistant, Julia Minton, had crunched the numbers based on actual bills to create a comparison chart showing just how this would work for various meter sizes and water use.
The proposed base rate for a standard single-family household with a 3/4" inch meter would be $28.20. After the first 1,000 cu. ft. of water used, an additional three cents per cu. ft. (7.48) gallons would be charged. The customer would pay an additional 3.5 cents for each cu. ft. over 2,000, and so on.
The PCSD customer with a 3/4" inch meter who uses only 620 cu. ft. in a month will receive a bill for $29.28, but if she uses 7,325 cu. ft., she'll pay $278.34.
Current costs for the same customer are $30 and $204.75, respectively.
To illustrate how a customer using large amounts of water can benefit from switching to a larger meter, the chart showed two customers who each used approximately 12,500 cu. ft., one with a one-inch meter and one with a 1-1/2" meter.
The customer with the large meter would save approximately $55 dollars if he used this much water.
Bernard suggested that the board work with customers to make sure they have the size meter that will save them the most money. Customers can switch to a larger meter if they wish and pay only for the cost of the meter and the labor to install it. If they want a smaller meter, however, they will have to pay a new connection fee, as if they were starting over from scratch.
The cost of a new connection was not discussed at the meeting, but district staff told the Redwood Times that the board is considering charging $3,500 for a new hook-up, as compared to the current cost of $1,000.
This is considerably less than the $12,000 hook-up fee included in the previous proposal, which prompted much public outrage.
Bernard calculated revenue requirements, which include operating and capital improvement costs, at $73,546 for the current fiscal year, with incremental increases to $104,026 in 2022.
But he expects the actual costs to be much less than that when current problems with the water treatment system are fixed.
Once the treatment plant is running properly and telemetry is installed so that operators can check current conditions remotely, Phillipsville will be "just a stop on the road" for his staff, Bernard said.
Only three members of the public attended this meeting. One speaker noted that this is a difficult time of the year to get people to come to meetings because it's harvest season and people don't want to leave their homes.
She suggested that Bernard set up a "module" explaining his proposal that could be posted at various locations in town so people could stop by during the day to get information.
Board chair Bonnie Mullaney nixed this idea, pointing out the cost of doing this. The board has made extraordinary efforts to send out information and notify people of the many extra meetings that have been held, she added.
Minton said the district has so far received 30 letters from customers, many with comments that were helpful in creating the proposal. Both Minton and the board members have had personal conversations with ratepayers as well.
Following this discussion the board quickly voted to hold a second meeting this month at which they will decide whether to go forward with this proposal by officially beginning the Prop. 218 notification process.
The next meeting was tentatively scheduled for 6 p.m. on Thursday, Oct. 24 at the fire hall in Phillipsville.
For more information, call the PCSD office at 943-1650.