On April 21, the Davis City Council approved the Public Works Department’s recommendation that consulting firm NBS Government Solutions will conduct a sewer-rates study.
Since the current sewer five-year rates will end in 2016, the study is set to begin in either May or June.
“The Utility Rate Advisory Committee… and the [City Council] will use [the] study to determine rate settings for sewer rates after 2016,” said Robb Davis, Davis mayor pro tempore.
The current sewer rate settings are based on a five-year rate determined in 2011. According to Michael Lindquist, a principal civil engineer and an expert on sewer rate studies, the rate study will be conducted early because the city is more certain about the cost of the wastewater treatment plant project than it was in 2011.
“We decided to look at the ratings now as we have a much better forecast of what our costs will be in the future,” Lindquist said.
According to the City of Davis website, the sanitary water rates are calculated by a fixed monthly charge. There is an additional capped variable charge that is determined by each property owner’s usage of water during the winter.
“Right now we are using winter water consumption [to calculate rates] …We are not directly measuring the fluid flow of the household. In the future, we may go with a different approach,” Davis said.
According to Lindquist, NBS was chosen to conduct the study due to its experience in cooperating with cities and municipalities in managing such rate studies. According to Tim Seufert, the managing director of NBS, the firm has a 19 year history of working for cities and other local governments.
“We prepare similar surveys for cities all across California,” Seufert said in an email interview.
He added that the project lead, Greg Clumpner, is a 30-year veteran economist on utility rates.
The city expects the firm to examine how the drought-induced changes in water consumption will affect the city’s rates and revenue. These statistics will also affect the sewer rates, as the city’s revenue requirement factors into determining the appropriate fixed costs for the future sewer rates.
Additionally, the firm will compute and present the variables in specific user rates and not just median values, which will give a more proximate approach to the rate settings. The firm will also provide comparisons of other municipalities’ methods of conducting rate studies.
According to the staff report, the sewer rate study will include public and business outreach to receive feedback on the proposed rates and structures in July and the Draft Sewer Rate Study Report will be presented to the Utility Rate Advisory Committee by late July. The study, budgeted at $87,050, will end with the final adoption of updated sewer rates, expected to be established by late November.
“Any utility rate, whether it’s…solid waste, water, sewer; they are subject to a Prop. 218 process, where the community members can protest the rates [set]. Any rates structure that we bring forward will be subject to a Prop. 218 vote,” Davis said.
The ratepayers have the right to protest the change of rates. If a majority of the ratepayers disapprove and voice their opposition to the change, the rates will not go into effect and the process will have to be redone. The consulting firm will continuously conduct outreach to ratepayers and Davis residents to seek their opinions about the sewer rates as part of the study.
“[Prop. 218] requires every ratepayer receive notice of what’s going to occur [on the study]. Outreach will occur throughout the entire process,” Lindquist said.
Graphic by Jennifer Wu.