Water wholesaler expected to raise rates at tonight's meeting

Zone 7, which sells water to Pleasanton, to vote on rate increase

Zone 7 Water Agency's Board of Directors will meet at 7 p.m. tonight to decide how much to raise wholesale water rates, a decision that will trickle down to affect the water bills of local residents and businesses.

The water agency, which sells potable water to the cities of Pleasanton and Livermore, Dublin San Ramon Services District and Cal Water's Livermore service area, is expected to raise rates roughly 30%.

While Zone 7 doesn't sell directly to homeowners, retailers historically raise water bills when wholesale rates increase. Board members are expected to vote on the measure at their public meeting at the Zone 7 office, 100 North Canyons Parkway in Livermore.

A reluctance to raise rates significantly amid recession recovery has put the agency in a situation where it will be financially unstable within two years if it continues with its current wholesale rate, according to Raftelis Financial Consultants, which was paid to evaluate Zone 7's wholesale rate and financial viability.

The agency is facing about $20 million a year in capital improvement project costs to replace and repair outdated pipes, pumps and filtration systems, which general manager Jill Duerig said cannot be delayed any longer. The agency has also taken a revenue hit due to reduced sales because of water conservation in the Tri-Valley area, prompted by the drought.

The roughly 30% increase will likely translate to an increase of $7.90 per month for residents starting Jan. 1, the agency estimated.

The board will be presented with a proposed rate of $3.15 per hundred cubic feet of water for 2016, $2.93 per hundred cubic feet for 2017 and $3.32 for 2018, according to a staff report included in the board agenda packet.

At the board meeting last month, staff suggested about 20% of the increase be a temporary drought surcharge and about 10% be an ongoing rate increase.

The specifics behind the final recommended rate structure had not been released as of Friday afternoon, but consultants presented a potential tiered rate structure that charged retailers based on their historic use.

The increases are based upon the consultant firm's recommendation that the agency bring in $3.5 million in revenue from Jan. 1 to June 30, $7 million from July 1 to June 30, 2017, and $5 million from July 1, 2017, to June 30, 2018.

The city of Pleasanton was among the retailers that spoke out against the tiered structure, particularly because the city would receive about a 38% increase in their water charges, whereas other retailers would have a roughly 33% increase.

"We request that Zone 7 spend time evaluating rate structure options and work with the retailers to ensure any new structure is uniform and relatively easy to understand and implement," Pleasanton city manager Nelson Fialho wrote in a letter to the board.

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9 people like this
Posted by Penny Watcher
a resident of Beratlis Place
on Oct 18, 2015 at 8:17 am

I have a related post in article about rate increases imposed by Pleasanton

OK, So Zone 7 has financial troubles. No argument that they have to do something to address that to be a viable ongoing concern. BUT there are two sides to the ledger - I will bet you your first months increase from zone 7 that there has not been anything close to a 35% reduction in expenses. Actually if one looks there has been an INCREASE in expenses with a large chunk being employee salaries and benefits but it's near impossible to figure that out because Zone 7, as the Grand Jury noted is anything but transparent. (What,? A major rate increase in the works and the consultants report is not yet avaiable and its 3 days before the scheduled decision?)

The second question that must be asked when a company gets itself into financial problems is who has accountability? yes the drought is a contributing factor, but the drought has been with us (according to a presentation by Zone 7 management) for 8 years - why has something not been done before this? The answer is easy, poor oversight and management.

Management and the Board are always accountable. When that happens in the private sector those are gone.

THAT is what must happen at Zone. Where is the Board of Supervisors? Where is the legislature? Where is the PUC? Where is the Fourth Estate? Or does this need to come down to "We the people"?

1 person likes this
Posted by One source
a resident of Foothill High School
on Oct 20, 2015 at 3:17 pm

One source who controls all of our water - MONOPOLY. They can pick the rates and we are stuck. Time to diversify our water sources.

Sorry, but further commenting on this topic has been closed.

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