As the City Council prepares to review water and wastewater rates and revenues, it would be good to review facts about these issues, in part because I have heard so much speculation over the past months that is simply wrong. Let’s start with:
How did we get to a point where a big rate increase was needed? Simple, many years of no rate increases followed by a severe drought. In my career in water, I have seen several agencies do this. They had no rate increases for many years (14 years in one case) and eventually they ran into a drought where water use and revenue dropped dramatically. Suddenly they had very big revenue problems.
That is exactly what happened in Benicia: we all benefited for years from rates much lower than needed to keep the system running properly, while the costs of deferred maintenance and deferred capital projects mounted. We borrowed against the future and then ran right into it. Instead of borrowing money from a bank so we could pay our bills, we borrowed by deferring maintenance and capital projects. The bill always comes due, and it did.
Claims that water rates are higher than others or above “market” are wrong. Let’s start with water rates (wastewater will come next) for cities in the Bay Area. This tble shows bi-monthly water use bills around the Bay Area, for low (winter) use of 200 gallons per day (gpd) or about 16 billing units (100 cubic feet per unit) and high (summer) use of 500 gpd (40 units).
*Antioch: $102 (200 gpd),
$192 (500 gpd)
*Concord: $104 (200 gpd), $205 (500 gpd)
* Vallejo: $93 (200 gpd), $229 (500 gpd)
* Benicia: $108 (200 gpd), $208 (500 gpd)
* Martinez: $125 (200 gpd),
$223 (500 gpd)
* EBMUD: $103 (200 gpd), $230 (500 gpd)
* Bay Point: $137 (200 gpd), $316 (500 gpd)
* San Jose: $132 (200 gpd),
$262 (500 gpd)
Benicia’s charges are similar to the others. These are current rates, and Benicia has rate increases scheduled, but so do the other agencies (San Jose, one of the most expensive, is going for a big rate increase right now).
Note that Bay Point and San Jose are about 30 percent higher than the others; those who think privatizing the water system will reduce rates– by getting rid of public employee pensions, for example– should understand that rates for systems run by private companies are usually higher (there are a number of reasons for this, including the fact that they are allowed to make a profit).
As an aside, if you buy a bottle of water at the movies or ball game, you will pay about $3 or $4 per pint. Out of the tap, a pint costs less than 1/10th of a cent.
Bottom line: Benicia’s water costs are in line with similarly situated agencies in the area.
Wastewater charges in Benicia are higher than other agencies around the Bay Area. A comparison of wastewater rates shows Benicia has higher rates. Benicia costs shown in this table are for the lower end and the high end of the water use charge (18 units per bimonthly bill).
* Antioch: $75
* Concord: $100
* Vallejo: $93
* Benicia: $124 to $148
* Martinez: $88
Note that Martinez and Concord are both served by CCCSD, and Antioch is served by Delta Diablo, so their charges reflect both city and other agency costs. Of those shown, only Benicia and Vallejo have their own wastewater systems. One reason Benicia might be higher is that its costs (many of which are fixed) are spread over a small rate base (the others have the advantage of the economy of scale in their wastewater treatment systems). Nonetheless, the Council should take a look at why costs are higher here.
We had “Double Rate Shock” last year. Rates went up at the same time as new meters went in. Many agencies schedule rate increases for the winter months when water use is low; that way people see the effect gradually through the spring, and are able to adjust their water use and budgets accordingly. Benicia’s went into effect in the summer when water use is highest, and they coincided with new meters. On average, the old meters were running about 10 percent low, so there was a double rate shock at the highest use period.
Having the rate increase at the same time that the new meters were installed conflated the cause of the big bills; it would have been better to separate the two so people could first see how much water they were really using well before the rate increase. For those whose old meters were under-reporting by 25 percent or more, the summer bill had to be a big shock. No matter that for many years they were paying for far less water than they used, the rate increase rather than the new, accurate meter was very likely blamed for the big bills.
(Part 2 will focus on solutions to the costs and will be published at a later date.)
Dr. Greg Gartrell has lived in Benicia since 1988. He retired in 2013 from his position as a water manager, and has over 40 years experience in water resources. He earned his doctorate in environmental engineering science at the California Institute of Technology.
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Greg, the city needs to hire you as one of their consultants. It would be money well spent. This was very well written and easy to understand, something the city has been unable to provide. You should post this on NextDoor also. Thank you for a clear, concise, and easy to read and understand explanation.
I fully understand what you are saying. But to not put the blame on some present and past councilmembers directly is wrong. Mayor Patterson has been in office for over 14 years others not quite so long. This issue could have been less of a burden on the residents/voters if all the infrastructure costs could have been spread out. The council was given three options as I remember. They took the high ,road. On the present council only Councilmembers Hughes and Campbell wanted the low road. So now you have two on the council that went for the high road. Former councilmember Strawbridge who voted for the high road is no longer on the council being replaced by Steve Young., He is with the mayor on this all the way. This issue is not what is needed it is how they went about trying to fix a long time issue in a very short period of time. Who pays now all present homeowners and renters. Anyone who no longer lives in Benicia got the full benefit now being paid by ,present owners/renters . That is the problem. ,This water/sewer rate issue must be looked into and a much sounder and better solution to resolve this issue must be taken. I live in Benicia and pay a Benicia water rate. I do not care what other city’s pay it has not effect on me. Only what I pay in Benicia. The city of Benicia must have new leadership as this city is going to face many other local issues. The other big one is roads, streets and sidewalks. Add lack of economic development and you face a big problem. Without very strong pro economic development members on the city council we are in for some very big future cuts. PBB will pinpoint those issues and there will be cuts. Regardless of how they describe them. The shock is coming. I do appreciate Greg taking the time to give this very good explanation. I do hope our elected officials will now take the time to help the very fine resident/voters of this very special city. Again, THANK YOU GREG.
OK, good explanation showing that a municipality is too short sighted to run something complex (politics of spending money on “projects” instead of doing maintenance). Happened to Sacramento with their Rancho Seco power plant. Also, you should mention that the town politicians strongly advocated brown lawns (another example of short sightedness) during the drought to the extent that Benicia politicians preened about Benicia’s lack of water use–which of course, had they not been so short sighted, caused a very large drop in revenue. THEN, in order to capture “water wasters” they added new meters onto the budget. Seriously, privatize it, take it out of the hands of idiots. We’ll be better off in the long run.
Benicia several years ago was notorious for not being able to account for 25% of their water going into the city distribution system. The new meters were suppose to help account for that water. The assumption being that the old meters under reported, as opposed to say high pressure unseen water main leaks. The question: Does the city now account for their water. Did the meters in fact proove to be a big part of the problem. This never seems to come up and of course is very important question.
I am partially going to answer my own question. There is a 2017 water report on the City of Benicia web site that states we are now at 10% of treated water that is unaccounted for. The improvement is based on leak repairs and meter replacement. It would still be nice to know if the meters were a big problem as stated, but I didn’t see that information provided.
Good question, complicated answer.
It really takes about a year of data to get a firm grip on Unaccounted-for-water (UAW) because you need to see how meters are doing in both low flow and high flow conditions. But from what I have seen so far (and the data are preliminary) about 2/3 of the reduction in UAW is from meter replacement, 1/3 from leaks. Anecdotally, a lot of leaks were found during the meter replacements, but on the homeowner side of the meter.
Those old mechanical meters are unreliable: typically, at 25 years old, they run 5 to 25% low, 10% being about the average, but they are especially bad at low flow (winter) use.
The City put a lot of effort into leak detection and repair starting in 2014, but the UAW did not go down appreciably during the first few years. So that too would indicate it was more a metering problem than leak loss.
You are correct though, The 25% UAW was embarrassingly high, one of the highest in the state.
Maybe you can explain how wastewater charges are computed. I once shut off the water for my home for 2 months but still got hit with a $50 bill (house was vacant while on the market). When I complained city said some bs about wastewater charges even if no water is used.
Yes that is true. Here is why:
Both water and wastewater have a fixed charge (Benicia’s charges are about $30 (plus $12 for the new meters) every 2 months for water, and $97 every 2 months for wastewater. Then there is a charge proportional to water use. Many agencies have only the fixed charge for wastewater (Vallejo, CCCSD and Delta Diablo, for example), So there is a fixed fee no matter if water (or the toilets) are used or not.
On the water side, even if you use no water, the water is there, ready to serve and available at high pressure for firefighters to put out the fire in your house, even if you are not using water. On the wastewater side, the entire infrastructure is there ready to serve as long as the property is connected. In many cases, wastewater charges are part of property tax bills (although not as a tax, but a fee). Some agencies call the fixed fee a “readiness to serve fee” to make clearer why it is there.
For both water and wastewater, about 80% of costs are fixed, regardless of how much water is used or wastewater is generated so high fixed charges can be justified.
I once thought about telling the bank that I shouldn’t have to pay the mortgage when I was on vacation, since the house was empty, but it probably would not have worked…..
FANTASTIC explanation Greg. Again, the City need you to explain this to the population. I especially liked the mortgage comparison.
It was a good comparison…OTOH, other utilities do not charge for services not rendered. PG&E for example. Some of these utilities have no outrageous charges to connect or disconnect, like our water/sewer. People live in towns and cities because there are public utilities (garbage, gas, electricity, cable, phone, water and sewer). It’d be nice if the city would privatize the system….it might cost us more in the short term, but politicians are not capable of making hard decisions about maintenance costs versus someone’s pet sculpture.
Connection fees cannot be charged by private utilities because those private utilities own the system, and that is how they are allowed to make a profit (the profit is based on the capital costs, not on operating). That is one reason they have higher monthly rates–they are recovering the capital costs (and profit) entirely on the monthly bill.
Public utilities are allowed to charge connection fees as a capacity buy-in charge since the public owns the system (through the agency). How much that charge is depends on the agency (or City) policy. EBMUD and CCWD have policies of “growth pays for growth” so their connection fees are large as they calculate it on a complete buy-in to the system capacity. They are about $25000 for CCWD and $25000 to $40000 for EBMUD. Bencia’s connection fee is less than $5000.
Other utilities commonly charge without regard to usage: Cable TV and telephone bills have lots of fixed charges regardless of use. Garbage charge is the same no matter how much or little I put in the can.
There was a push to privatize systems in the early 2000’s by big international firms, Ended up a disaster, with huge bills for customers and Enron like crashes for the companies (several of them were big French international companies)..
Went very badly in Great Britain as well: big systems were very profitable for the companies that took them over with modest price increases but the small systems like ours ended up with huge rate increases.
I simply won’t believe that city politicians (or any politician for that matter) has the ability to see beyond their next meal and their next election. Consequently, they are ILL SUITED to make capital expenditures on maintenance or infrastructure. A private company (or public corporation) will make a profit, but the profit is modest compared to the cost of rebuilding infrastructure that has been allowed to collapse due to negligence by short sighted politicians.
Because it would be a private utility, it would have no competition. Rates would be proposed by the company itself and confirmed by the PUC, whose Board is appointed by the Governor.
You’re right. PG&E is a perfect example of a for profit company that has a great record of taking care of the public interest. All I have to look at is San Bruno, bankruptcy, and most recently the Northen California fires. Did I mention the high electricity rates?
I certainly would not fly on an airplane owned by Benicia. Would you? The point is that they “would” buy substandard parts to save a buck here and there. Because it is government, they offer contracts and award the LOWEST BIDDER. Sure, PG&E (corporation) has oversight by PUC but they do have to make a profit (and pay my interest) and they do defer maintenance on infrastructure….there’s no perfect answer; but I will say that municipal control over infrastructure is not the better way to risk your life.
Thom,
I hate to break it to you, but as someone who has been working in the contractor field for over 30 years, everything is built by the low bid with very few and very rare exceptions. Private industry included.
John,
That is not the case with companies that are not short sighted. It is not just bottom line price that goes into the award decision. It often includes stability, minority ownership (depending on the politics locally), source and availability of parts, schedule is a big issue….yadda yadda.
I would also like to add that the State adds ever increasing regulatory requirements to discharge wastewater. This often leads to expensive system upgrades to meet those new requirements, we had that here in Vacaville, not sure about Benicia but it is a common theme.
Leaks were more of a problem from my observation locally. A fire hydrant had leaked nearly continuously in my neighborhood for 2 years. Despite being notified, Public works didn’t take action until mid-drought.
I partially accept the explanation. Water rates for Benicia may be comparable to other municipalities but I don’t believe you addressed the maintenance charges, which are a significant potion of each bill.
In Benicia, we are charged for usage and maintenance, for both water and waste water. Can you offer a comparison of our maintenance fees to other municipalities.
Finally, I simply do not understand why the Bay Area municipalities are forced to pay incredibly high rates for water when most areas around the country pay close to $40 per month for water. It cannot be all attributed to moving water. California must have layers of taxes and fees that are applied to our bills, but hidden.
Fixed bimonthly charges for water range from $37 (CCWD) to $59 (Martinez) with Benicia at $42 including the $12 meter fee. Most run around $38-$45 so Benicia is right in the middle.
Fixed bimonthly fees for wastewater are in the table: none except Benicia have a rate based on water use (EBMUD does too, but it is complicated by the fact that cities have charges for maintaining the local sewers and EBMUD just does the big collectors and treatment). Benicia’s fixed fee is $97, which from the table in the article is in the range of the others, but when the variable charge is added, Benicia’s overall bill is higher.
Why is it more in California? We have a drought every year, starting in April or so running to December. The Midwest and East and South all get precipitation year round, so their systems don’t need the enormous amounts of storage and aqueducts that we do, and their lawns get rain in the summer so they don’t have to design their systems to irrigate everyone’s lawns all summer like we do here. That high summer use means much bigger treatment plants and pipes and pumps and reservoirs–that costs a lot.
Those big reservoirs and canals are big costs. Benicia’s water costs include Oroville Dam (yeah, the one that had the $1 billion spillway failure last year) and the North Bay Aqueduct.
There are no hidden taxes or fees……yet. The Legislature has been trying to add a tax to everyone’s water bill to pay for improvements to small systems, largely in the Central Valley, whose customers have contaminated water (from farming activities, but also just naturally polluted groundwater). That would be the first statewide tax on water.
I thank you for you research and posting of this information. I believe what you posted is true and factual. But I cannot accept the overall position that our water bill amounts are “normal” or “average” compared to areas outside of the Bay Area and CA. $200 per month is not normal for water and sewage in other drought or arid municipal areas. Las Vegas, Phoenix, Denver, Spokane, Boise, Salt Lake City …. all are arid areas that must use reservoirs and water transportation systems to provide basic water. Their water treatment systems and technologies are same as ours. So why are our rates twice, or more, than that of those areas?
Something is wrong. There must be layers of fees, taxes, and regulations that are adding to the costs or our systems. We know our employees are paid much higher than surrounding states. But there is more to this than employee compensation.
I can accept that our water and sewage rates are comparable with other Bay Area cities. I can’t accept that our rates are comparable with other municipalities.
I will look into it more deeply but I don’t think it is a single thing. Gasoline prices here are much higher and have been for a long time. Salaries are a significant part of water and wastewater costs, so is energy. . But some is certainly subsidies: Utah, Arizona, Nevada get water from federal systems which are federally subsidized (or they use some much groundwater, cheap since it does not need treatment plants).
The Federal Central Valley Project is also heavily subsidized but mostly for agriculture. The SWP on the other hand is not, full freight is paid by contractors here, in the Bay Area and Southern California. And MWDSC, SCVWD, CCWD, EBMUD, SFPUC all have huge locally funded and expensive projects with little or no federal taxpayer funded subsidies. So I suspect the answer is a bit more complicated than regulations.
Environmental mitigation can raise the cost of big capital projects, but those are seldom a lot of the overall budget. I know of no taxes or fees, hidden or otherwise: public agencies don’t even pay state or local sales tax.
So my first guess is a combination of higher cost of living, construction and mitigation costs, lack of federal subsidies, higher salaries….with no single factor being “aha, that’s it”.
Thanks. Gas prices are partially, or largely affected by CA taxes and levies on our fuel, paid at wholesale levels. These levies are suppose to be guided into the transportation funds. The path to our high gas prices is pretty well documented. Also special formulation of gas limits supply.
Remember how water costs are 80% fixed? Spokane, Phoenix, LV, SLC all are in the 200 gpd range for per capita water use. California is about half that, admittedly down statewide about 20 to 25% since 2013. One reason for the big rate hikes (statewide) is that we are using less, but the infrastructure put in for the high use costs almost the same–well in addition to lower cost of living in those states, their customers (on average) use a lot more water, allowing much lower rates. That is a big factor (not alln of it, but a big part of the aha–that’s it).