FREQUENTLY ASKED QUESTIONS (FAQ's)
What do water, recycled water and wastewater rates pay for?
RESPONSE: Water, recycled water and wastewater rates are established to pay for ongoing operations and maintenance of the existing system. On the water side, the City purchases most of the water distributed to its approximately 50,000 residential, commercial and irrigation customers from the Sonoma County Water Agency. Costs involved in operating the water distribution system include the purchase of water and the daily operation and maintenance of two production wells, water mains, fire hydrants, valves, meters, pumps and other components of the system.
On the wastewater side, the City runs a local collection system of 580 miles of sewer mains serving approximately 45,000 customers. The Utilities Department operates and maintains the system that sends the wastewater to the Subregional Treatment Plant. The system includes 19 lift stations and the portion of the sewer that is within the public right-of-way.
The City is the managing partner of the Subregional Water Reuse System and the City’s customers pay for approximately 75% of the plant’s annual operating costs based on flow percentage to the plant. The system operates the Laguna and Oakmont wastewater treatment plants and oversees industrial pretreatment systems and distribution of recycled water.
Water and wastewater rates pay for staff salaries, operating materials and supplies, vehicles, training and projects included in the Capital Improvement Program (CIP).
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What are the reasons for the proposed increases to the water, recycled water and wastewater rates?
RESPONSE: Service charge increases are necessary to cover the rising cost of services and supplies, as well as to comply with new, unfunded regulations requiring retrofits and upgrades to existing facilities. There are several reasons for the proposed service charge increase:
- Capital improvement projects to repair and maintain aging water and sewer infrastructure
- New construction projects that meet the City's existing customers' storage and fire flow needs
- Restoration of water fund reserves that have been drawn down due to the economic recession
- Help increase revenue stability by re-balancing the water fixed charge
- Costs associated with new required environmental regulations
A significant portion of the Utilities Wastewater budget is based on paying back the bonds that built the improvements to the Subregional Wastewater Treatment Plant and the Geysers Project. In addition, new and increased State and Federal regulations have required expenditures in both the Wastewater and Subregional operating budgets.
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Are there proposed changes to the tiered water rates?
RESPONSE: No. In January 2007, the City implemented a tiered water rate structure for Single-Family Residential and Irrigation customers. The tiered rate structure allows reasonable, efficient water use, while discouraging excessive water use and encouraging water conservation. Currently, the Single-Family Residential tiered water rate structure consists of four tiers based on a customer's indoor water use or sewer cap.
Currently, the Irrigation tiered water rates consists of three tiers based on the customer's billing period water budget.
What is the “automatic pass-through” part of the rates?
RESPONSE: In 2008, State Legislation (AB 3030) provided for water agencies to implement an automatic pass-through rate for changes in wholesale water costs. In 2009, the City Council adopted a wholesale pass-through, which adjusts the water user rates charged to customers each July to reflect any changes (increases or decreases) in the cost to the City of wholesale water obtained from the Sonoma County Water Agency. The change only affects the water usage charge. The automatic adjustment will be in place for five years (2010 - 2014), and could be extended by the Council at the end of that time.
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What is the Utilities Department doing to reduce costs and increase efficiency?
RESPONSE: Santa Rosa continues to make every effort to keep costs down while maintaining the high level of service that customers have come to expect. The 2011/2012 Utilities budget is less than any Utilities budget since fiscal year 2005/06. Over the past few years, the City has worked with employees to reduce labor costs and the Utilities Department has acted to significantly reduce expenses by eliminating positions and reducing operating costs. For the most recent budget for Fiscal Year 2011/2012, the Utilities Department reduced the budget for water by 8.9%, for wastewater by 2.8% and for the Subregional Water Reuse System by 3.9%.
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What is the difference between fixed and user rates?
RESPONSE: The City charges both a fixed rate and a user rate for water and sewer connections. The fixed rate is based on the size of the meter at each location. Most homes have a 5/8” meter. The user rate for water is calculated by multiplying the set rate by the number of gallons used at the location during the billing period. The user rate for sewer is calculated in a similar fashion, but also includes a multiplier called a “sewer cap.” This figure is based on indoor water use and is calculated by averaging the water use during the winter billing periods (when outdoor irrigation is at its lowest). For more information on fixed and user rates, you may visit our website at http://ci.santa-rosa.ca.us/departments/finance/revenue/utilbill/Pages/default.aspx.
The City of Santa Rosa is required by the "Restructured Agreement for Water Supply" with the Sonoma County Water Agency to be a signatory to the California Urban Water Conservation Council (CUWCC) Best Management Practices. Included, for water conservation purposes, is a requirement that no more than 30% of water sales revenue be derived from fixed charges. By requiring that at least 70% be based on usage charges, customers have a financial incentive to improve water use efficiency. The City also has an interest in basing much of the rate on usage charges in order to allow our customers greater control over their total bill.
The ongoing day-to-day maintenance of the mains, services, and fire hydrants, reading water meters, paying bills, sampling water quality, filing reports and keeping the system within regulatory compliance all still need to happen even when water sales are low. Due to both the decline in water use and the annual pass-through rate increase (the pass-through rate is based on the wholesale cost of water and applies only to the usage rate), the City's current ratio of fixed to usage revenue has moved to about 19% fixed and 81% usage. The high amount of revenue from the usage rate leads to a more volatile income stream. The Board of Public Utilities directed a change in rates to achieve about 25% of revenue from the fixed charges.
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Does the change in the sewer cap definition affect how my sewer cap is calculated?
RESPONSE: No, the sewer cap will still be calculated the same as it has been. The sewer cap is based on indoor water use and is calculated by averaging three billing periods water use during the winter months. Each customer meter is read twelve times per year and the number of days in each billing period can vary from 28 to 35 days. The sewer cap will still be calculated by averaging the three billing period months that correspond with the winter months, when outdoor irrigation is typically not needed and water use is representative of indoor water use.
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What is the proposed change to the minimum sewer user charge?
RESPONSE: The minimum sewer use charge is proposed to be set at 1,000 gallons, or a sewer cap of 1.0. The sewer cap is based on indoor water use and is calculated by averaging three billing periods water use during the winter months, when water usage is representative of indoor water use. If the average of the three winter billing periods falls below one thousand gallons, the sewer cap will be set at 1.0, or 1,000 gallons per month. However, customers will only be charged sewer user charge when 1,000 gallons is used during the billing period. During any billing period, if water usage is less than 1,000 gallons, you will not be billed sewer user charges.
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Why do I need to keep paying higher water and wastewater rates to cover the costs associated with the City’s continued development?
RESPONSE: Expansion and upgrade of the water and wastewater systems to accommodate new development is paid by the new users through connection fees. There are two primary fees for water and wastewater: user fees and connection fees. The user fees are the water and wastewater rates that existing customers pay for daily operations and maintenance of these two systems and the usage at the customers’ location(s). The connection fees are the water and wastewater fees that new development pays to connect to the water and wastewater system. The Board of Public Utilities and the City Council approved increases of up to 27% (including an annual escalator) in combined water and wastewater connection fees effective July 1, 2007. Connection fees are designed to ensure that development pays for costs associated with expansion and capacity related to growth as called for by the City’s General Plan.
If development was halted as of today, water and wastewater rates would go up in the short-term since connection fee revenue would also halt. Connection fees are designed to pay for both the cost of building out the system to accommodate for growth and to charge new users for existing available capacity in the current system. If growth stopped, ratepayers would need to cover some costs that are currently picked up by connection fee revenue. It is the City’s intention that over the long run, growth-related capacity will be funded from connection fees charged to all new users of the system.
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What does CIP mean?
RESPONSE: “CIP” stands for “Capital Improvement Program.” Utilities Capital Improvement Program projects typically include rehabilitation and replacement of existing water distribution, sewer collection and wastewater treatment systems which, in some cases, are very old. Utilities CIP projects typically:
- Improve flow rates in water mains in order to better support firefighting efforts, improve water quality, and increase reliability;
- Improve water storage tanks to provide adequate, reliable storage for domestic, firefighting, and emergency needs;
- Improve sewer system performance in order to reduce infiltration and potential backups; and
- Improve processes at the treatment plant in order to provide the highest quality plant effluent and meet regulatory requirements.
These projects are usually large-scale and long-term, as opposed to routine Operations & Maintenance (O&M) repairs.
In 2002, the BPU directed staff to accelerate the rate of clay sewer pipe replacement. Sewer flow into the treatment plant is nearly five times higher during a peak storm event than it is during dry weather. The additional flow comes from storm water and ground water that enters the collection system. Studies show that replacing older clay pipe – which tends to have faulty joints and crack easily – is one way to reduce this extra flow (referred to as “Inflow & Infiltration” or “I&I”). Although the City has replaced over 20.68 miles of clay main since 2002, 7.9% of our sewer mains are still clay pipe. The BPU’s goal is to have the City replace 1.2% of the total sewer mains every year. Currently, the department is replacing 0.15% per year.
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What does O&M mean?
RESPONSE: “O&M” stands for “Operations and Maintenance.” The O&M portion of the Utilities Department budget covers the daily costs of operating and maintaining the services and programs provided by the department. Some of the specific items included in O&M are employee salaries, costs to purchase water, energy costs related to pumping water and wastewater to its destination and treating wastewater, equipment-related expenses, increased regulatory requirements, and the cost of supplies required to perform required work and repairs.
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Why can’t we use more recycled water throughout the City to offset potable water requirements?
RESPONSE: On September 11, 2007, the City Council, on the recommendation of the Board of Public Utilities (BPU), approved an ordinance that will allow the City to require future commercial, industrial and residential development projects to use recycled water in place of potable water, when possible. The initial areas that will be targeted are those in close proximity to the Laguna Treatment Plant on Llano Road. Existing business and property owners will also have the option of tapping into the recycled water supply. Eventually, recycled water may be available in the Bennett Valley and Rincon Valley areas, too.
The rate for recycled water will be slightly reduced from the potable water rate. Discounted rates for recycled water should not increase overall rates since recycled water costs the City less to acquire than water from the Sonoma County Water Agency. The addition of recycled water to our “water portfolio” will lead to lower rates for all users.
At this time, it would not be cost-effective to install “purple pipe” for the transmission of recycled water throughout the entire City service area. However, the City is supportive of increased use of recycled water and the Utilities Department is actively researching funding opportunities for implementation. Currently, the City has grant funding of $4.004 million from the State of California Proposition 50 grant to construct a small expansion of the recycled water system along Stony Point Road, between West College Avenue and Occidental Road. Construction of this expansion began in 2010 and is almost complete. Additional information on the City’s recycled water program is available by clicking here.
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What is the process for setting rates?
RESPONSE: A Rate Task Force made up of staff from the departments of Utilities and Finance convenes every two years to determine the rates required to generate sufficient revenue to operate the water and wastewater utility. These determinations are based on approved and anticipated operating and capital budgets for the upcoming two calendar years.
This year, the Rate Task Force held numerous meetings with the Board of Public Utilities (BPU) Budget Subcommitte and study sessions with the full Board to develop assumptions and recommendations. On October 6, 2011, the BPU reviewed the final recommendation of the Board of Public Utilities Budget Subcommittee and voted unanimously to forward it to the City Council for consideration.
The City Council holds a public hearing in late-November/early-December to consider the rate recommendation. This year's Public Hearing will be held on Tuesday, December 6, 2011, on or after 5:00 p.m. in the City Council Chambers. A mailer is sent to all residents and property holders at least 45 days prior to this hearing.
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