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City gearing up for water increases

POSTED November 27, 2012 4:59 p.m.
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Ceres residents will get their chance in January to protest six years' worth of rate increases in their water bills designed to raise cash to cover improvements to an aging water system.

A Proposition 218 protest hearing will take place on Jan. 28 at 7 p.m. at the Ceres Community Center. Under Prop. 218, any rate increases will pass unless more than 50 percent of residents lodge or written or verbal protest, which is a difficult undertaking.

City officials say that there are some sections of the water system that date back 80 years and is in need of replacement.

The last time the city of Ceres raised rates was in the 2008-09 fiscal year, earmarked to cover deficiencies in operational costs. City Engineer Toby Wells said the proposed increases are for capital investments that will eliminate existing "bottlenecks" in the system and bring the system to maximum capacity.

Mayor Chris Vierra said the City Council "is cognizant of the economic times facing residents" but also noted that cities which made hard decisions have headed off higher costs at a later date.

Councilman Mike Kline said he appreciated staff's hard work to develop a rate structure that amortizes rates over six years.

Wells said one of the drivers of the rate adjustments is positioning the city of Ceres to set aside more funds for $8.6 million in much needed capital projects.

John Farnkopf of HF&H Consultants said the city has only been setting aside $900,000 annually for capital projects but needs to save $2.3 million annually by 2017-18 fiscal year.

Capital improvement projects planned include $1.2 million for a new north side well, $4.9 million Central Avenue main, and $400,000 to design River Bluff Park tank and pump station.

The city is short in capital improvement project (CIP) funds because water rates remained flat for 12 years prior to 2008 rate increases designed to make the water system pay for itself. The recent move to a metered rate structure was part of a state mandate for conservation, and not intended to raise revenues.

City officials were advised to change the formula for both the monthly service, or base charge, and the volumetric rate based on a cost per 1,000 gallons. A wide disparity currently exists whereby commercial users pay double the volumetric rates than do residential, said Wells.

The city is adding a second tier as a "warning sign" to encourage major water users to curb their use. The average Ceres household uses about 16,000 gallons of city water per month and pay 72 cents per 1,000 gallons. The top top percent of Ceres households, however, use 50,000 gallons per month, with some hitting over 200,000 gallons. They will be billed at a higher rate - $1.45 per thousand gallons starting next year and $2.90 per thousand by 2017-18.

Wells said the plan will effectively raise the volumetric charge from 72 cents per 1,000 gallons to $2 per 1,000 gallons by 2017-18.

During summer months, the average Ceres household now uses 19,000 gallons per month.

The average Ceres household currently pays $31.28 per month. That is based on a $20.42 per month in service charge and $10.86 per month in volumetric charges based on use of 15,820 gallons per month. Under the proposed rates, the average Ceres household would pay $35.57 per month next year, $39.93 in 2014-15, $44.18 in 2015-16, $47.24 in 2016-17 and $50.43 in 2017-18.

Commercial rates receiving water through a two-inch line would go from an average of $93.18 to $139.36 for the 2017-18 year. The new charges would affect schools with larger lines and could mean Ceres Unified School District pays $20,000 extra per year for water.

The new rates are expected to further drive down consumption since it would be based on higher costs. Wells said the proposed rates may realize a three percent additional conservation savings per year over a five-year period. Since going from a flat rate to metered rate, the city has realized a 24 percent reduction in water consumption.

Surface water is the "wild card" in the discussion about future rates, said Vierra.

Use of treated river water will require more improvements to the existing water system because more pressure would be in introduced.

The proposal does not take into consideration what must be set aside for the city to participate in the $151 million regional surface water project, said Gerry Nakano of West Yost Associates, which was commissioned by the city to produce the water study. When the plant goes on line in 11 years, he said, Ceres and other cities plan to blend both treated river water with well water for home use. Ceres will be able to take six million gallons per day but currently uses 12 million per day. Nakano said Ceres households may be impacted an additional $8 to $16 per month once the surface water project goes on line.
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