Bay Area water agencies are facing the prospect of a fifth year of drought in California. The State has mandated reduced potable water use by urban water agencies. Reports from the East Bay Municipal Utility District indicate that:
- As of April 1, 2015, the state-wide snow survey recorded water content at 5% of the 65-year average — the lowest level since record keeping began in 1950.
- Runoff from the Mokelumne River, EBMUD’s principal source of supply, is on track to be the lowest since 1977. This will be the fourth “dry” or “critically dry” year in succession. June 30, 2015, will mark the driest three-year period and the driest four-year period in the basin since record keeping began in 1905.
- Total water available in EBMUD storage as of June 30 has dropped each water year since 2010 and this year is expected to be at the lowest level seen since 1977, when the population served by EBMUD was smaller.
Bay Area water agencies have different water sources, ranging from local aquifers and streams, state and federal reservoirs and canals, and distant mountain watersheds; but all are being required by the state to reduce customers’ water use.
For the Bay Area’s urban water agencies, single-family residences demand most of the water and pay most of the revenue. These revenues include fixed periodic charges based on meter capacity as well as charges based on the volume of water actually used. The volumetric charges are widely viewed as an important tool for water conservation.
To reduce potable water use, most California urban water agencies have adopted some form of tiered rate structure. This means that a household pays a low rate for “minimal” water use and a higher rate for water use beyond that, effectively incentivizing conservation. However, as a result of California’s Proposition 218, water rates must be consistent with the cost of providing water service to a customer. Trying to comply with this rule may have made some water agencies reluctant to use aggressively tiered water rate structures. The Bay Area demonstrates substantial diversity in this regard.
EBMUD plans to raise its three-tiered, single-family residential water rates July 1, 2015.To cover higher costs and revenue loss incurred by the drought, there will also be an additional drought surcharge on all tiers as well as penalties for “excessive use.” Maximum drought condition rates would be $0.50 per hundred gallons for the first 172 gallons per day per household; $0.69 per hundred for the next 221 gallons per day; and $0.90 per hundred for the next 590 gallons per day. “Excessive use,” meaning more than 983 gallons per day at Drought Stage 4, would cost a household $1.17 per hundred gallons. Note that the maximum water rate charged is 134% higher than the lowest usage charge for potable, single-family household water.
Beginning July 1, 2015, single-family household water rates in San Francisco will be $0.65 per hundred for the first 98 gallons per day and $0.87 per hundred gallons for additional water. While San Francisco water will cost more for most residential users than for similar EBMUD water users, the maximum water rate is only 34% higher than the lowest potable water rate.
In Marin County, the Marin Municipal Water District is more generous in the volume of water offered in its four tiers with an initial water rate of $0.50 per hundred gallons rising to a top-tier rate, after 971 gallons per day, of $3.00 per hundred gallons — 500% higher than the lowest rate.
Most striking, and progressive, is the residential water rate structure of the Stinson Beach County Water District. SBCWD uses seven pricing tiers. The first tier offers 147 gallons per day priced at $0.26 per hundred. Above an average consumption of 983 gallons per day, the rate reaches a peak of $3.68 per hundred — an increase of 1,312%. This steeply-tiered rate structure provides low-cost access to water for basic human needs while discouraging wasteful use.
It’s easy to lose perspective when comparing water rates across a region. Remember that even at Marin’s exorbitant-sounding highest tier rate, customers are paying less than 4 cents per gallon. Compare this to the cost of gasoline, a can of Coca-Cola or bottled water! On the one hand it is appropriate that this most essential of life’s necessities be affordable. Many water-policy experts, however, are in agreement that the overall low cost of water creates serious disincentives to conservation.
In addition to volume-driven usage charges, water agencies collect capacity charges with each billing, typically based on the size of the water meter. Some water agencies also include volume-driven elevation charges, wastewater-collection charges, and sewage-treatment charges. The overall mix of revenues is necessary to meet all the costs of the services provided. Balancing largely fixed costs with largely variable, volume-based revenues is a challenge for water providers made harder by drought and Proposition 218.
This is the first of a series of articles on California water being developed for the Yodeler. What do you want to know about water supply, use and cost? Send your questions to firstname.lastname@example.org.