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Zone 7 Out-of-Control Rate Increases

Original post made by GX, Another Pleasanton neighborhood, on Nov 11, 2011

Given the recent complaints regarding the Zone 7 water rate increase, I contacted Zone 7 to gain a better understanding of their historical rate increases. To put it simply, their rate increases are out of control:

- Since 2003, Zone 7 water rate increases have grown nearly 250% faster than inflation
- This means that we are paying 60% more for water than we did in 2003 - much more than we should be
- There have been years where annual rate increases have been 8, 9 and even 16%
- The rate increase for next year will once again be much greater than the inflation rate

This is clearly a public agency that is failing its customers. Allowing this to continue erodes the standard of living for everyone in the valley.

Pleasanton Weekly, it would be great if you could investigate this story more and help to put pressure on the organization to dramatically improve. If it can't get its act together, maybe it is time to consider consolidating with another organization who has better performance.

We citizens deserve better from government agencies such as Zone 7.

Comments (3)

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Posted by Sam
a resident of Oak Hill
on Nov 11, 2011 at 11:11 am

GX said: "To put it simply, their rate increases are out of control:
- Since 2003, Zone 7 water rate increases have grown nearly 250% faster than inflation
- This means that we are paying 60% more for water than we did in 2003 - much more than we should be"

You can't logically conclude that rate increases are "out of control" or that Zone 7 is "failing its customers" because rate increases in recent years have been higher than inflation. For example, there may been large deferred maintenance items which finally had to be addressed. You say you contacted Zone 7. Did you ask them to explain why their recent rate increases are outpacing inflation?

As a water customer I don't like to see rate increases either. But we really need to get some facts concerning the factors driving these rate increases.

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Posted by Arnold
a resident of Another Pleasanton neighborhood
on Nov 11, 2011 at 1:50 pm

There was a recent Contra Costa Times article on this topic: Zone 7 board approves Tri-Valley water rate hike Web Link

"The Zone 7 Water Agency board voted 5-2 Wednesday to raise the rate for treated water it sells to its four water retailers from $900 to $945 per acre foot, a 5 percent increase from the current year. The Zone has increased the price of treated water 68 percent since 2005, when it sold water for $562 per acre foot. The district also plans to use $4.2 million in reserves to cover budget shortfalls for the next two years."

It is troubling that a 68 percent rate hike in this short amount of time requires an additional 4.2 million in reserves over the next two years. They do mention a project that they are attempting to self fund, as opposed to selling bonds, and that may have something to do with the increases. What is troubling is that Zone 7 was contemplating rate increases of 10 percent before settling on the five percent rate hike, probably because the city of Pleasanton (among others) was complaining. Either way it seems like the increase in cost has more to do with what's palatable to the public than anything else.

According to the article, "The Zone has also cited restrictions on pumping in the Delta and a decline in demand for increased costs." I've seen several water districts make the claim that decreased demand resulting from successful water conservation programs has led to revenue shortfalls, as justification for rate increases. I suspect water districts have their own meter and can closely track demand. Hard to argue against conservation but maybe there is a balance. Asking people to conserve water and using that success as justification for a rate increase, which will probably never go down, is confusing. My guess is that if Zone 7 wanted a 10% increase this year and only approved the 5% increase we are probably looking at a 5% plus increase next year. Little doubt this cost trend can't continue at this pace without becoming a hot topic.

This is a somewhat informative article that provides few answers while raising many questions. Nice to see someone is paying attention.

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Posted by GX
a resident of Another Pleasanton neighborhood
on Nov 11, 2011 at 2:20 pm

Sam, are you associated with Zone 7? If so, maybe you could fill us in.

I do know this. A couple of years ago, I inquired with Zone 7 on their continued large rate increases and they blamed it on chemical costs. I suggested back then that they look to bundle purchasing with other organization. I think since done that.

But let's assume for a moment that recent rate increases have to do with deferred maintenance items. This begs the questions as to why the items where deferred and why if they were deferred there were still significant rate increases back then? Also, wouldn't investments like that be amortized over their useful lives?

Net, a properly managed operation would plan for items like this. And continued elevated rate increases (over a period of ten years) suggests that Zone 7 is not a well run organization and therefore their customers are paying the price.

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