The various scenarios being considered have different implications for the agency's reserve funds and ratepayers -- some options are more expensive for consumers, but then provide more money for operating, emergency and drought reserves, along with funding water supply reliability projects.
The official vote on water rates is set for the regular board meeting on Oct. 17. Until then, Zone 7 directors say they welcome public input.
"Feel free to email the board, and also, I'm certainly happy to ask questions that you put forth as well," board president Angela Ramirez Holmes said at a special workshop on water rates held on Sept. 5.
Zone 7 sells potable water wholesale to Tri-Valley water providers serving Pleasanton, Dublin, Livermore and parts of San Ramon, and those costs are passed through to local residents and businesses in their regular water bills.
The options under consideration have been crafted based on a recent cost study by utility consultant Raftelis, hired by Zone 7 to determine treated water rates for 2019-22. Currently, the scenarios being looked at involve setting rates for four years into the future -- however, after last week's meeting, the board wants to also consider a two-year rate cycle, according to General Manager Valerie Pryor.
At the latest meeting, staff presented three scenarios, refined versions of options presented at Sept. 5's special workshop, Pryor said.
All scenarios account for a 3% CPI increase every year along with a gradual increase of the fixed charge revenue recovery component from 35-45% by 2022 -- the fixed costs include capital funding, county services, operating costs and maintenance and labor, while variable costs consist of the water itself, professional services, chemicals and utilities.
The first scenario, the "base case," includes just inflationary rate adjustments and $9 million in funding for water supply reliability projects. The second would fund the operating, emergency and drought reserve funds at target levels and allocate $9 million in funding for water supply reliability projects.
The third presented option would also fund the three reserves at their target levels, in addition to directing $15.2 million for water supply reliability projects.
At the Sept. 5 workshop, the board presented how the different scenarios would affect rates for a household using 10 ccf of water per month. One ccf (or a centum cubic feet) is equivalent to 748 gallons of water -- according to the Environmental Protection Agency, an average American uses 100 gallons of water per day.
However, at the workshop, both members of the public and directors pointed out that many Livermore and Pleasanton residents use more than 10 ccf per month. Because of this, at the Sept. 19 meeting, staff adjusted their presentation to also present how changes would affect households that use 15 or 20 ccf of water per month.
The "base" Scenario 1 would have the least impact to ratepayers' water bills. According to staff, under this option a household using 10 ccf per month would pay an additional $0.36 per month next year, up to an additional $0.70 by 2022; residents that consume 20 ccf would see a $0.72 per month increase in their water bill next year and an extra $1.40 by 2022.
Under Scenario 2, 10 ccf consumers would pay an extra $1.95 per month starting in 2019 and an additional $2.94 by 2022; those who use 20 ccf would pay an extra $3.90 per month next year and an additional $5.87 by 2022.
And if Scenario 3 were chosen, 10 ccf-using residents would see a $2.43 per month increase in 2019, up to a $3.53 per month increase by 2022; while those using 20 ccf would pay an extra $4.85 per month next year and an additional $7.06 by 2022.
Throughout the various conversations, staff have sought to emphasize both how ratepayers' dollars are being spent, and how the agency is pursuing cost efficiency measures to mitigate rate increases.
Some of the cost control measures include Zone 7's continued soft hiring freeze, an increase of employees' share of medical premiums, the early purchase of the agency's North Canyons Administration Building, energy savings attained from PG&E pricing programs and the Del Valle Water Treatment Plant solar panels and buying discounted water treatment chemicals through the Bay Area Chemical Consortium.
Osborn Solitei, the agency's treasurer and assistant general manager of finance, also pointed to the favorable bond ratings the agency recently received, both as something that lowers Zone 7's borrowing costs and as an indicator that Zone 7 is in stable financial condition. This past spring, the agency received a AA+ rating from S&P, and an AA from Fitch.
"This just shows that the agency revenues and cost control measures are in line, that that's why the rating agencies are able to give us a very good rate," Solitei said on Sept. 5. "Not a lot of agencies can get that rate."
For every dollar ratepayers pay, according to staff, 32 cents goes toward labor costs, 25 cents toward capital investments, 21 cents toward operating costs, 14 cents for water, 5 cents to pay off debts and 3 cents for other services and supplies.
Many residents have been voicing concerns about the upcoming increases, both at board meetings and through other mediums. Some have called for greater transparency regarding how specifically their money would be used, particulary in Scenarios 2 and 3.
"This water supply reliability project, it's just kind of an unknown factor, kind of a pot of money that was thrown out there ... 6.1 million bucks or whatever the figure comes out to be, would be perfectly justifiable if I knew what the heck it was," said one Livermore resident at the Sept. 5 board meeting.
Board vice president Sandy Figuers said that the water agency has a variety of crucial infrastructure projects on the horizon, and that water rate increases were necessary.
"We're going to have to have rate increases, and I have no problems about voting for good rate increases to increase water supply reliability, everything," Figuers said on Sept. 5. "This is what we're here for. So I don't know exactly what the rate increases are going to end up to be, but they're going to go up."
This story contains 1029 words.
Stories older than 90 days are available only to subscribing members. Please help sustain quality local journalism by becoming a subscribing member today.
If you are already a subscriber, please log in so you can continue to enjoy unlimited access to stories and archives. Subscriptions start at $5 per month and may be cancelled at any time.