NID rate hike to pay for looming capital costs
If Nevada Irrigation District directors approve a rate increase in two weeks, raw and treated water users can expect to see a 6 percent increase this year and up to a 6.5 percent increase every year for the next five years.
The board will decide whether to approve the rate increase, the first in two years, at a public hearing Feb. 27. It will cost the typical single family home $1.50 extra per month the first year.
Notices were sent to 27,100 rate payers last month as required by California Proposition 218. So far, the district has received 55 letters of protest.
The rate change is part of the district’s first 10-year master financial plan. When used in combination with property taxes and a drawdown of $30 million from a $70 million reserve fund, the hike will cover looming capital costs in the coming decade. Estimated costs to replace and maintain infrastructure is set at $270 million, including the cost of replacing pipelines.
“We have a lot of costs before us,” said Tim Crough, NID’s assistant manager.
The largest and smallest seasonal irrigation users will be hardest hit during the first few years as the district switches from a tiered rate structure to something more equitable, said Division 2 Director John Drew. In the past, moderate irrigation users paid a disproportionate rate compared to those who used the most and least amount of water, Drew said.
“There has to be equity as required by the law. No one customer is better than any other,” Drew said.
Even with the increase, the price of water will be affordable compared to other areas including the cities of Grass Valley and Auburn, said Alex Handlers of Bartle Wells Associates, the Berkeley-based consulting firm that put together the report.
Several years ago, rate-payers saw a 9 percent increase that had been recommended by a cost of service study. NID abandoned the hike after one year to gather a clearer sense of the agency’s financial outlook, Crough said.
The district’s historical 2 percent annual average increase couldn’t keep up with a 4 percent inflation rate, Crough said.
“You have to be higher than inflation to grasp that margin,” Crough said.
Several years ago, a Nevada County Civil Grand Jury report found the district was not recovering enough in rates to cover the cost of doing business.
“People are only paying half of what it costs the district to provide water,” Handlers said.
The recent rate study found treated water and raw water were both being subsidized with taxes and other sources of revenue, Drew said.
“We’re moving away from subsidized rates, that’s the primary shift,” Drew said.
NID plans to draw down its $70 million in reserves by $30 million to cover infrastructure costs, but eventually, NID will have to borrow money, Crough said.
Completely drawing down the reserve cushion could put the district in a risky state and can lead to higher increases in the long run, Handlers said.
If half of rate payers oppose the increase, then the board of directors will not be allowed to raise them, Handlers said. Rates are scheduled to go into effect March 1.
In other business:
• NID reached a settlement with the Banner Mountain Homeowners Association Pipeline Committee over a controversial Lower Cascade Canal pipeline project. As part of the settlement, the district agreed to monitor wells during and after construction of the project and ensure free hook-up to NID lines if well water were depleted.
• Directors approved a resolution to form an assessment district in the Rodeo Flat neighborhood, where at least five wells went dry this summer. The assessment district will allow property owners to help pay for treated water hook-ups over 25 years.
To contact Staff Writer Laura Brown, e-mail firstname.lastname@example.org or call 477-4231.
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