Jul 30, 2014
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A Rate Hike Ill-Considered, Water Board Member Says

Are there alternatives to soaking customers? Monday's special meeting was scheduled after the Purissima Hills Water District director Gary Kremen wrote a letter urging exploration of several.

A Rate Hike Ill-Considered, Water Board Member Says A Rate Hike Ill-Considered, Water Board Member Says A Rate Hike Ill-Considered, Water Board Member Says

 

By email, by post, hand-written or typed, the letters of protest have been coming in to the Purissima Hills Water District against new proposed rate increases. Nobody likes rate hikes, of course.

Perhaps what the district's board didn't expect was a five-page letter from one of their own opposing the increases, too. 

"There seems to be an assumption that our customers do not feel pain of rate increases or of high rates in general," wrote board member Gary Kremen, in an letter to the board in mid-March.

The district, which serves some 6,400 residents and ten institutional customers, may cover a town with an image of affluence, he said. Yet longtime residents, or those who had fallen on hard times, seemed to be overlooked by the board.

"We have customers on fixed income or lower than average income — rate increases hit those customers hard."

The district last raised rates in March 2010 as much as 50 percent for some. According to a water study prepared by a consultant, the new proposed rates are estimated to increase between $5 and 100 a month for customers.

Why? In the report prepared by Pakpour Consulting Group, which was asked to analyze the rate structure and recommend possible increases, the district's costs had dramatically increased since 2006, as the San Francisco Public Utilities Commission (SFPUC), the wholesaler that provides water from Hetch Hetchy Reservoir, has been undertaking huge infrastructural upgrades. Conservation measures, which had been encouraged, had resulted in reduced revenues, as well.

In the proposed rate increase, the water board has eliminated the conservation tier for the largest users, those consuming more than 150,000 gallons a month. that would appear to send the message that conservation is not a priority.

To meet the rising costs, the board is looking to large rate increases, including a provision to automatically pass through any increases from SFPUC, before considering ways to reduce water district costs and find revenue, Kremen contended.

Automatic pass-through increases, without the board voting on them, also took away public accountability, Kremen argued.

"Appropriately and proportionately sized rate increases should only occur if the district absolutely need rate increases," he wrote. "I'm not currently convinced that it does."

He also proposed a residential assistance program to help those in need. 

His letter raised several areas to explore before the board turns to customers to make up the gap:

  • Aggressive procurement policies on capital improvement projects
  • Aggressive cost reduction on recurring operating expenses; he cited the San Jose Mercury News' public salary report in describing certain personnel costs as  "way out of whack" with the market.
  • Outside review of capital investments needed
  • Shifting fire-safety capital improvements to the Los Altos Hills County Fire District
  • Refinance and renegotiate debt
  • Generate income from unused and underused property, such as cell towers on PHWD land
  • Investigate the Santa Clara Valley Water District tax levy
  • Consider waiving board stipends (Kremen did so when he took office)

The board was poised to only hold one public hearing on the proposed rate increase on April 11, and then vote on it in the same meeting. The the increases would be seen in the very next billing cycle.

Some residents writing 

" This proposed rate increase is in my opinion over reaching, using these cost increases and water unit increase by the SFPUC as an excuse to pass on future increases without notice ... this is simply wrong!" wrote Richard Aurelio, who asked that the April 11 meeting be rescheduled so that customers could be notified of the date, time and protest provisions in their monthly water bill.

The water board has announced a special meeting Monday at 9 a.m. in its offices to discuss the points in Kremen's letter. General Manager Patrick Walter said a preview of the April 11 presentation would be made.

Customers, under the provisions of state Proposition 218, can protest in writing to the fees, and if a majority protest against it, would legally reject the fee.

The Purissima Hills Water District will meet Monday, April 2 at 9 a.m. at the , to discuss the points in Kremen's letter and Wednesday, April 11 at 6:30 p.m. for the public hearing and vote on the proposed increases.

 

Proposed Residential Rate

Tier

Units of 

Water Consumed

Current

Water Rate

Proposed Water Rate

with Increase

1 1 through 10 $2.70 per unit  $3.21 per unit 2 11 through 30 $4.15

$4.66

3 31 through 60 $5.60 $6.11 4 61 through 100 $7.05 $7.56 5 101 through 200 $8.50 $9.01 6 Over 200 $9.95  $9.95 (no change)

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