Nevada County water district leaves rate hikes up in air
Water rates still may be going up.
Hours of wrangling ended in a stalemate Wednesday after the Nevada Irrigation District’s board of directors voted to move forward with the process to institute a rate hike.
The actual increase, if any, would be determined at a later date.
The board was set to review and potentially accept a Water Cost of Service Study, which included proposed water rate hikes.
District Finance Manager Marvin Davis and consultant Greg Henry went over the study, explaining that the district’s water rates have been subsidized for years by revenue from its hydroelectric division.
Over the last five years, the district has experienced approximately $8 million in loss of revenue due to drought, Davis said. The district is asking to hike the water rates to improve revenue stability and the overall financial health of the district, he said.
A proposed water rate schedule would gradually increase the amounts paid by treated water and raw water customers, with the biggest jump in the first year of 45 percent for the fixed charge for treated water customers. That would increase each year for five years, with a total increase of 87 percent — from $24.83 a month to $46.34 for the lowest-volume customer. Raw water fixed service charges would go up 5.4 percent in the first year with a total increase of 32 percent over five years — from $483 to $638 per miner’s inch.
The volumetric service charge would also increase.
According to the study, for low and average users, the water district’s proposed rates are 5.4 percent below other agencies.
The rate schedule proportionately allocated more of the increase to treated water customers, since they comprise the bulk of the customer base. But that inequitable division raised concerns, both from the public and from several directors on the board.
“Treated water customers will bear the burden,” said resident Charlotte Allen, adding she does not want to subsidize vineyards and Arabian horse farms.
The proposed increases will be a hardship for low-income residents and a challenge for those of moderate means, said former district board member Nancy Weber.
“If you live on a fixed income, it’s going to be tough times,” she said.
General Manager Rem Scherzinger noted the district has created a fund to help disadvantaged customers and added the district plans to move $34 million from hydroelectric revenue to mitigate the impacts.
Board member Laura Peters argued for a moratorium on the proposed rate hikes, asking the district’s managers to come up with a 5 percent cut in their departments.
“We haven’t seen a good faith effort to decrease spending,” she said.
Ricki Heck agreed, saying, “I feel firmly that as stewards of public money, we should not raise rates until we have looked internally at how we can cut our costs.”
Scherzinger said internal reviews are underway and staff have been working hard to keep the budgets flat the last few years.
An initial vote to approve the study and begin the rate adoption process failed on a 3-2 vote, with Nick Wilcox and Chris Bierwagen voting yes and Heck, Peters and Chairman Scott Miller voting no.
A proposed motion by Heck to postpone any action on the rate increase, and a suggestion from Miller to change the proposed increase to just 15 percent over two years, were shelved after some intensive back and forth with the district’s attorney.
As part of a process mandated by state law, in order to increase water rates, the district needs to follow a process that includes sending a notice of a public hearing to customers that contains the amount proposed. Customers then have 45 days to protest the fee increase in writing. If 50 percent plus one submit written protests, the proposed increase is defeated. The cost of that noticing was estimated at $100,000.
Wilcox and Bierwagen pushed to move forward with the rate adoption process with the intent of revisiting the actual rate hike during that process. Wilcox agreed that a cost-cutting analysis should be performed and that a different cost-sharing model could be explored, but said, “To not raise rates would be grossly irresponsible.”
The board eventually voted 3-2 vote (Heck and Peters opposed) to move ahead with the process, reserving the right to adopt lower rates than what are recommended.
Contact reporter Liz Kellar at 530-477-4236 or by email at firstname.lastname@example.org.
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