Water District hears updates on new rate structure

Water District hears updates on new rate structureIWV Water District President Ron Kicinski, Vice President Chuck Griffin and Director Chuck Cordell mull over pros and cons of presenter Mark Hildebrand’s information on budget-based rates. — Photo by Laura Austin


By BRIAN COSNER, News Review Staff Writer

The Indian Wells Valley Water District board of directors heard a presentation on a new budget-based rate structure during its Aug. 13 meeting and is expected to hear another in September.

Budget-based rates differ from the district’s current structure as it attempts to take into account variances for number of household residents, parcel sizes and individual needs by creating an individual “water budget” for each customer.

Hildebrand Consulting’s Mark Hildebrand phoned in to brief the board on the pros and cons of budget-based rates.

According to Hildebrand, budget-based rates can provide better revenue stability as they more keenly outline predicted water use and can be a “powerful communication tool” when it comes to conservation, as customers get an idea of how much water they “should” be using.

While he admitted that “perceived inequity” is one of the cons, budget-based rates attempt to take into account how much water a customer actually needs – based on occupants per home, landscape data and weather data – and is arguably more equitable.

Hildebrand said that whether budget-based rates are more or less equitable “depends on who you talk to.”

“To have tiered rates based on an account basis on a meter size is a bit of an artificial construct,” he said, referring to the current rate structure. “It really should be based on how many people live there, the amount of landscaping, etc. And by clearly defining their water budget, it connects the dots for that customer on what an efficient use of water should be.”

Hildebrand added that the new rates could be a difficult paradigm shift for customers to adjust to.

“Whenever you change rates, there are always going to be some winners and there are always going to be some losers, that’s just the nature of it,” he said. “Some folks will think just because that person has a four-acre lawn, doesn’t mean they should get more water. What is fair?”

He said that determining equitable budgets can be even more difficult for commercial and industrial use.

In addition, collecting and implementing all of the customer information for a new billing system will be more expensive initially, costing the district anywhere from $600,000-$800,000 in upfront costs. But the goal of budget-based rates is to be less expensive in the long run by having a more accurate expectation of revenue.

The system could also take anywhere from seven to 24 months to implement, according to Hildebrand’s presentation.

“My thought is, why would a person get more water allocated because they use more? That seems to be counterintuitive for conservation,” said Director Peter Brown. “If I want to have three horses, 100 trees and 10 kids, I should pay more. I’d be torqued off it I didn’t use a bunch of water and the guy next to me used a bunch of water at the same rate.”

Hildebrand said Brown’s points were well taken but the counter argument is for comparing a home with a large family versus a home with a single resident.

“In the current system, they get the same rate,” he said. “But the widow living alone can be a water waster whereas the people next door can be very water conscious.”

Brown said budget-based rates can be “overcomplicated.” He didn’t want to base budgets on too many assumptions.

But Hildebrand mentioned that the district is making more assumptions by using rates based only on meter size.

District Vice President Chuck Griffin said he likes the idea of budget-based rates because higher-rate customers, in Tiers 3 and 4, are “paying the rates” for lower-tier customers.

“Even if it was just based on parcel size, that would be a huge difference,” said Griffin. “A large house might need three Master Cools and may be conserving water, but they’re still considered a water waster” under the current structure.

“I would like to get further educated about it,” said Director Don Cortichiato. “I think we need to trust our customers, work with them and come up with a system that satisfies everyone.”

President Ron Kicinski said the district needs to discuss how detailed the budgets should be based on the costs and timeframes associated with creating a budget-based structure.

Stan Rajtora spoke from the public to say that the district needs to encourage conservation by reducing fixed rates and charging everyone based more on their water use. “The only complaints I hear are the fixed rate is too high and they don’t see any advantage to not using water,” said Rajtora. “And on the other side, people say Tier 4 water is way too high. Why not keep it simple?”

While Hildebrand admitted that high fixed rates can “have very little impact on people’s behavior,” consultants, as well as the board of directors, have said that the fixed rates are crucial to keeping the district afloat during financial emergencies.

For more information see iwvwd.com.

Story First Published: 2018-08-24