By Tim Hunt
Zone 7 water rate increase sparks protestUploaded: Dec 13, 2016
The Pleasanton City Council got quite an earful from three residents last week on a consent calendar item that was favorable to residents’ wallets.
Three residents verbally ripped Zone 7 for its rate increases that the agency attributed to the drought. Pleasanton residents did an excellent job of conserving water, at the cost of landscaping in many cases, and were frustrated because Zone 7 raised rates. Rates will go up 18.7 percent on Jan. 1.
One speaker went so far as to compare Zone 7 to greedy pigs and urged the council to disband the agency. Mayor Jerry Thorne reminded the speaker that the council has no authority to disband the independent agency and that citizens in June had the opportunity to vote on Zone 7 directors.
For its part, the council approved suspending its policy of an automatic increase in water and sewer rates to match the increase in the Consumer Price Index. The city will take a $600,000 hit in the enterprise fund (designed to be self-supporting based upon rates paid by users) this year. It will be offset by delaying planned maintenance projects.
The challenge for Zone 7, as well as many water agencies, is that a large proportion of their costs are fixed and not effected by how much water it delivered. Zone 7 is one of 29 agencies that are part of the State Water Project that operates the California Aqueduct, several reservoirs, the Harvey O. Banks pumping plant in the Delta and the South Bay Aqueduct that delivers water to Zone 7, the Alameda County Water District in the Fremont area and the Santa Clara Valley district. About 2.7 million Bay Area residents drink water delivered from the State Water Project.
When the project was conceived and construction started in the late 1950s, Zone 7 signed on to receive water to offset the over-drafted groundwater table. Imported Delta water has been used to manage the groundwater table for decades and has stabilized it.
The fixed cost Zone 7 deals with are the bond payments on the water project. That’s equivalent to a mortgage on your home. When you go on vacation, the gas and electric bill decreases as does the water/sewer bill (depending on the time of year). You still must pay the mortgage—the lender does not care whether you occupied the house that month or not.
It’s the same for water agencies paying fixed costs. While operating costs will drop with lower volume, the mortgage and other bonded debt still must be paid.
This is why some agencies are shifting to a fixed monthly cost to cover the debt and fixed costs and then a variable cost to cover actual quantity delivered.
I learned quite a bit about this and other water issues as a consultant on Delta outreach for Zone 7 for eight years. My contract ended June 30.