Bi-monthly minimum and usage rates would go up
The directors of the Pine Cove Water District have scheduled a hearing for May 9 to listen to public comments about, to discuss and, possibly, to decide on a five-year rate increase. The bi monthly charge could grow about 33 percent and the cost per 1,000 gallons almost four times after five years.
After setting the hearing, Director Vicki Jakubac stressed, “These are not etched in stone yet. We’ll go ahead with the hearing and are not locked in yet.”
These increases were recommended in the report on the district’s physical conditions, and revenues and costs from General Manager Jerry Holldber and the district Engineer John Egan of Engineering Resources of Southern California in Redlands. He has been working with PCWD for nearly four decades.
The major point of the study, and Egan stressed it to the board, was that the fixed costs to keep the district operating are too dependent on revenue from water usage, which is variable, especially in drought periods.
He also analyzed the costs — pumping, pipelines, treatment — necessary to deliver the water to customers’ faucets. Egan calculated that the current usage charge of $1.80 per 1,000 gallons was substantially less than the actual cost of about $7 per 1,000 gallons.
Also, Egan told the board that the costs to keep the district open — salaries, benefits, insurance and others — regardless of how much water is sold, are currently more than $550,000 annually. Yet the bi-monthly minimum fee of $62 for each customer yields less than $400,000,
In addition to adjusting the water charges — fixed and usage — to reflect the actual costs, Egan offered several recommendations about the district’s capital facilities.
First, he congratulated the board on the district’s ability to provide water regardless of weather conditions.
“Your production capacity is 400,000 gallons and a peak-day demand is likely about 200,000 gallons,” Egan shared with the board. “You have plenty of production capacity to meet peak-day demand.” He also stated that storage capacity “is more than adequate to meet the district’s needs.”
While he recommended some work on well no. 17, which would add more capacity, he does not consider this a high priority. He also complimented the district’s efforts to replace aging and wearing pipelines on a regular basis.
Egan put more emphasis on maintenance of storage tanks. He had a coating consultant inspect the tanks. While all were in good condition, he advised that the board should plan on undertaking roof coating and shell work within the next few years.
A new project he recommended was replacing the current water meters, which require hand reading to prepare the bills, with “smart” meters.
There are two different smart meters, but both would save the time to read the meters and to prepare the bills. Both would enable customers to have better and more timely access to their bills and usage.
Either of these meters would ultimately reduce expenses for reading and billing water usage. The time saved will be substantial, Holldber said. He plans to do further research and bring the proposal to the board in the future.
The estimated cost of these two projects is more than $500,000, according to Egan. Consequently, he urged the board to build sufficient reserves. The current $200,000 reserve is not sufficient to protect the annual budget when this work needs to begin.
Based on the recommended rate increases, PCWD’s reserves would be about $700,000 in five years compared to the current $280,000. However, smart meters would have been bought and installed for all customers, and work begun on maintaining the storage tanks, new source development and continuation of pipeline replacement.
In considering possible rate increases, Holldber emphasized to the board that the water charges cannot exceed the cost of producing and delivering the water. This is a major reason he has limited the water usage tiers to three.
“I’m trying to get up to the real costs, but not in one jump,” he said. “This is easier for the customers.”
He also explained how the rate increases would be applied to the few multi-user customers in the district. The proposal would try to treat their consumption the same as the residential users, but with more than one residence on the site.
He attributed the large increases to his past efforts to keep the cost of water down for several years. Now the production costs and future work will require revenue closer to the actual costs.
“Today, we can produce more water than demand,” Holldber said proudly. “We’re in good shape for today, but we can’t sit on that. It’s important to start preparing for the future.”
Board members asked several questions about the operation and quality of the smart meters, which Egan answered.
“It’s exciting to have finally come into the 21st century and only cost a few extra dollars,” said President Robert Hewitt.
The usage rates are based on selling 30 million gallons, which has been the usage in the past few years. Nearly a decade ago, Egan noted that PCWD production ranged from 38 to 41 million gallons annually.