A possible rate increase and change to the water-rate model is on the horizon for Fern Valley Water District customers.
At a workshop following their Aug. 18 board meeting, directors heard a presentation from the Rate and Revenue Committee, composed of directors Trisha Clark and Robert Krieger.
“We’re abandoning the current process for determining the cost of water production,” Krieger said. Water costs will be based on capacity, which is the potential demand on the system, and the actual usage.
The committee’s proposal would increase the bi-monthly service charge to $60 from $32.70. The number of tiers for water usage charges would be reduced from three to two tiers.
The cost of water for usage in the first tier would remain $4.35 per hundred cubic feet, but the size of the tier would be shrunk from 1,400 cubic feet to 500 cubic feet. The cost of water in tier 2 would be reduced to $6.10 per hundred cubic feet from the current rate of $10.68.
The monthly service charge represents about 60 percent of revenue. This increase is because the district’s fixed costs are about 95 percent of total costs, according to Krieger.
Expected revenue would be about $700,000 compared to the current water revenue level of about $520,000.
The two tiers reflect the two water sources — surface and ground — for FVWD. The cost of production from the surface collection is less than producing water from wells, Krieger said.
“No matter how much water we sell, it will be more difficult to justify tiers for conservation,” General Manager Victor Jimenez told the board. He was referring to the 2015 state Appeals case, Capistrano Taxpayers Association Inc. vs. City of San Juan Capistrano.
The committee also recommended that the district establish specific reserve categories, such as operations and equipment, rather than just one general reserve account.
A second workshop is tentatively planned for September. If the board is fully satisfied, it will proceed with a Proposition 218 notification and public hearing before the end of 2017, according to Krieger.
During the regular meeting, Jimenez reported that the preliminary balance for fiscal year 2016-17, which ended on June 30, was slightly more than $200,000.
Contributing to this positive result, according to Jimenez, was the low level of capital investment this year. During fiscal year 2016-17, capital expenses were about $125,000. In 2017-18, the capital budget is projected to be $455,000, and remains at that level then increases for the next decade.
“If we don’t maintain the system, we’ll be like Los Angeles in the news weekly [about water leaks],” Jimenez said.
In water business, Jimenez reported that the water level of the office monitoring well dropped more than 18 inches in July and flow in Strawberry Creek has nearly stopped. Consequently, water production in August and early fall will rely more on the wells.