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Water district switching to flat rate

Posted: June 14, 2014 8:36 p.m.
Updated: June 14, 2014 8:35 p.m.

Newhall County Water District officials have pulled the plug on a tiered water rate structure initially designed to encourage ratepayers to conserve water.

On May 15, directors for the district – one of four water retailers in the Santa Clarita Valley - voted to drop their tiered water rate structure that’s been in place since 2005. But not all directors are happy about the move.

“The (Newhall County Water District) just took a step backward,” said Director Lynne Plambeck, who voted against the move. “It will now be the only local purveyor without conservation pricing.”

Not so, according to other directors and the district’s general manager who see the new rate structure as a fairer way to pay for water. Other directors also had concerns about legal challenges over the tiered rate system.

Since 2005, customers in the district that takes in Newhall and parts of Canyon Country, Saugus and Castaic have been paying a flat monthly service charge plus a graduated rate on water used. The more water they consumed, the higher the rate per unit for that water.

Under the new system, customers will pay a lower flat monthly rate and the same rate for water used, but that rate will be higher than it was before. District officials call that the “commodity charge.”

“We wanted to reward all users,” district General Manager Steve Cole said last week. “We chose to reduce the service charge for all customers, which is the fixed cost you pay for water.”

The district has reduced its service charge by 20 percent - from $19.18 to $15.27 per month.

“This is fairer for everyone, since we’re putting more of the cost into the commodity charge - which puts it in the customer’s control,” Cole said.

The new rate is for customers with three-quarter-inch metered accounts, which is most residential customers and makes up about 80 percent of the district’s clientele.

For customer balancing their household budgets at the kitchen table, the new rate looks like this:

A service charge per month of $15.27 plus a commodity charge of $2.30 per unit used. One unit equals 748 gallons of water.

The previous service charge was $19.18 and the per-unit charge ranged from $1.067 to $1.981, depending on which tier the customer fell into, which was determined by how much water he or she used.

Plambeck remains convinced, however, that removing the district’s tiered rate system removes the incentive to conserve water.

No incentive

Ten years ago, the district considered a tiered system the best way to proceed in motivating customers to conserve water.

“Water is a precious resource,” said Plambeck, a longtime elected water board member as well as a long-standing member of the local environmental group Santa Clarita Organization for Planning and the Environment.

“Some people will understand its value and use it wisely no matter how it is priced, but many people don’t realize the value of a resource without a pricing structure that reflects its value.”

“California is now experiencing its worst drought in 500 years,” Plambeck said in an interview last week. “Throughout the state, water agencies are looking at ways to encourage conservation.

“Now, no matter how much a customer uses, the rate will be the same - the reward for conservation has been eliminated,” she said.

“This is certainly not the time for any board to dismantle a rate structure that encourages conservation. It sends the wrong message to our water users.”

Legal concerns

One concern about retaining the tiered rate system was a legal one, Cole said.

In jurisdictions outside the Santa Clarita Valley, similar tiered water rate systems sparked more than conservation - they prompted lawsuits.

News of recent civil suits filed against water agencies in Palmdale and San Juan Capistrano that used tiered rates prompted district heads to rethink their own payment structure.

“The tiered system ended with cross-subsidies which were the main issue in two recent court cases,” Cole said. “The courts found their rates were not fair.”

“The tiers were kind of an artificial pricing which exposed us to legal challenges,” Maria Gutzeit, president of the district’s Board of Directors, said Thursday.

“My main consideration was, number one, that the tiered system was fairly arbitrary, and because of that I became concerned about the legal risks.”



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