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BPU votes for tiered rates

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County > Top rates could go up for heaviest water users this summer

By Arin McKenna

By a 4-1 vote, the Board of Public Utilities threw its support behind a seasonal tiered water rate structure. Chair Timothy Neal voted against the ordinance.
Included in ordinance is a six-percent rate hike for all customers, which Department of Public Utilities staff said is necessary to cover high capital and maintenance costs whether rates remain flat or become tiered.
The goal of the tiered seasonal rate is to assign costs for producing water to the highest users.
“It’s not intended to be punitive, it’s not intended to be a conservation rate, it’s intended to recover those costs,” said Robert Westervelt, deputy utilities manager for finance and administration for the Department of Public Utilities.
Westervelt noted that that the increase to $5.32 per gallon for the top tier is well below neighboring communities that are trying to curb water usage, where the top tier is $20 to $30 per gallon.
DPU reports that based on historical data, 21 percent of residential customers use 56 percent of the total residential water consumed during the summer, when water consumption more than doubles.
If council approves the ordinance, new residential seasonal rates would be:
First Tier: $4.19 per 1,000 gallons for the first 8,999 gallons consumed (same as current unit rate). Staff originally proposed starting the second tier at 7,000 gallons, but adjusted that to accommodate large families.
Second Tier: $4.45 per 1,000 gallons for consumption between 9000 and 15,000 gallons; and 
Third Tier: $5.32 per 1,000 gallons for all consumption above 15,000 gallons. 
The tiers are graduated, meaning that a customer who uses more than 15,000 gallons would pay the first tier rate for the first 9,000 gallons, second tier rate for gallons 9,000-15,000 and the third tier rate for gallons in excess of 15,000.
Board member Stephen Tenbrink asked what factors were driving the third-tier rate.
Westervelt responded that the department’s analysis indicated that DPU could make do with one less well if not for additional peak season water use. The rate is based on assigning the average cost of an average well to that usage.
In previous meetings, staff had also noted that electric rates for pumping water shoot up in the summer because wells frequently pump day and night to meet demand, including during times when peak electric rates apply.
There were 15 residents who attended the public hearing. Those opposed argued that a tiered rate would penalize large families and, as Lawry Mann put it, “lead to a scruffy community.”
“I once read that trees give back to the Earth seven times what they take from it,” Mann said. “It’s a win for the environment to have more green space, more flowers, more vegetable gardens in our town. These rates will discourage that.”
“Although this is not designed as a conservation measure, it will certainly have some impact in that direction, because a higher cost is going to drive people to use somewhat less water. I think that is a very good thing,” said Mark Jones, chair of the Pajarito Group of the Sierra Club. “The water we are using is a finite resource. We don’t know what the recharge rate of our aquifer is going to be over the next 50 years…This is an arid country and we should live as if it was an arid country.”
Jones also argued that with the long term drought, Los Alamos should at least give the appearance of encouraging conservation.
Barbara Calef, president of the League of Women voters, noted that the league conducted a study of the county water supply from 2007−2009 and concluded that conservation is essential for the sustainability of the aquifer, and that tiered rates have been proven to be an effective measure to reduce consumption.
One point of contention in both public comment and on the county’s open forum was the fact that the county, schools and businesses will not pay the higher seasonal rate, although they will see significant rate increases for the larger meters they use.
“We do want to keep Los Alamos beautiful and provide for large green spaces throughout the community. We thought that the most effective way to do that to benefit the most people was to encourage the downtown community, the schools that have large greenscapes that are used throughout the summer by all the citizens and the county parks, to be able to provide those large greenscapes for everybody’s use,” Westervelt said, noting that the golf course, North Mesa ball fields and the White Rock ball fields all use nonpotable water.
Vice Chair Chris Ortega addressed misconceptions about the proposed rate structure, including the argument that it would penalize large families.
“There was a large family from White Rock that commented in January, and under the proposed tiered season rate structure, the rate would be $10 a year less than an across the board increase, based on last year’s consumption,” Ortega said. “And they use quite a bit of water.”
Ortega noted that many customers, even those using 16,000 gallons, would pay less under the tiered rate structure than with the six percent increase on the flat rate, and that even someone using 30,000 gallons would pay just $9.81 cents more per month in the summer.
“So the impact is not significant, even for large users,” Ortega said. “I think compared to communities around us, the proposed rate is not punitive and still does what we need to do in terms of controlling our costs.”
Tenbrink provided additional calculations, estimating that it would cost a 50,000-gallon user $258 a month under the tiered seasonal rate and $231 with the flat rate.
“So the person using 50,000 gallons is only paying $26 more during the peak months,” Tenbrink said.
Ortega also responded to comments on the open forum claiming rate payers would be subsidizing the ski hill, noting that the ski hill receives no county water.
“I support a rate structure that properly allocates costs where costs are due,” board member David Powell said. “I’m concerned that in order for this to be approved by council, a much more convincing argument has to be made of where the increase in costs due to high summer usage comes from and how that is fairly allocated to the highest tiers.”
BPU’s council liaison, Councilor Kristin Henderson, echoed that sentiment, noting that she herself was convinced by the arguments she has heard.
Powell was also concerned that a $1 fee for conservation education had been dropped from the original proposal. DPU Manager John Arrowsmith responded that education would continue to be a priority, but that the board had asked that the cost be included in the rate structure rather than as a separate fee.
Neal asked Tenbrink, who made the motion to approve the ordinance, to accept a friendly amendment to raise the third tier level from 15,000 gallons to 22,000 gallons, on the grounds that once the tiered system was in place it would be easy to move from a cost-recovery rate to a punitive rate.
Westervelt argued that if the board approved that, DPU would not reach its revenue objective and would either have to ask for another rate increase sooner or curtail some of the scheduled infrastructure projects.
Tenbrink rejected the amendment.
If council approves the ordinance, it will go into effect starting July 1. The ordinance will be introduced at council May 27, with the public hearing scheduled for June 27.