Proposed EID Rate Increase

EID Rate Increase

On February 4, 2010, the issue of El Dorado Irrigation District rate increases was resolved following the Proposition 218 public hearing for the proposed rate changes. The adopted rate increases are:

18% for 2010
15% for 2011
5% for 2012

The original proposal had been for an increase of 35% in 2010, followed by the same 15% and 5% increases, and 5% increases in two additional years (2013 and 2014).

The Citizens Alliance adopted this position prior to proposal of the adopted ("Plan B") schedule of rate increases:

The El Dorado Hills Citizens Alliance recognizes that the circumstances involved with the currently proposed water and wastewater rate increases are more complex and limiting than is easily evident. We recognize that our area's current economic circumstances are challenging for both the El Dorado Irrigation District itself and its customers as well. A large portion of those customers are El Dorado Hills citizens, and they have legitimate needs and desires to minimize costs. Therefore, the Citizens Alliance urges the El Dorado Irrigation District to diligently seek courses of action to limit rate increases to the lowest legally feasible levels.

Under these criteria Plan B was more appropriate than the original proposal. As was noted by EID General Manager Jim Abercrombie at the public hearing, this plan also is very close to the limit of ability to restrain rate increases without risk to public safety and appropriate levels of service for both water and wastewater. It appears to represent the best possible balance at this time between adequacy of service and limiting rate increases.

Reference Materials for EID Rate Increase Considerations

EID Notice of proposed rate increases (Proposition 218 Notice)
EID rate information presentation, from January 13, 2010 workshop in EDH
EID news report on board briefing on Rate (Bond) Covenants for bonds
Scan of attorney's presentation slides on Rate Covenant
EID fact sheet for rate increase workshop
EID Waterfront January-February 2010 news publication

Note: This fact sheet includes comparison of EID rates to other suppliers in the Sacramento Region.The Citizens Alliance did a smaller rate comparison study for water rates only, not checking wastewater rates, and using a slightly different test case data point: EID assumed water consumption of 2,700 cubic feet in a bimonthly billing period, the Citizens Alliance check was based on 2,200 cubic feet per month. Both studies independently found that the cost of water from EID was the lowest of all agencies sampled.
Notes on the Rate Covenant presentation, summary by Paul Raveling from the 1/11/2010 board briefing
EID 2009-2013 Capital Improvement Plan -- begins with comparison of preceding year's CIP with current year
EID 2010-2014 Capital Improvement Plan - New CIP, begins with similar comparison for new CIP
Observer's note: By initial inspection it appears that in the past 2 years EID has eliminated or deferred
somewhere between $180 million and $200 million in planned Capital Improvement expenditures
EID 2008 Comprehensive Annual Financial Report - Financial data for the year ending December 31, 2008
Westin Report: Comprehensive Management and Organizational Assessment - Final Assessment Report, May 12 2008, by outside contractor Westin (http://www.we-inc.com/)
EID Reorganizatiion Plan of September 8, 2008 - Year 2008 management action in response to Westin report
2009 - 2013 Strategic Guide - April, 2009 5-year guide to strategic planning, responding to Westin report
2009 - 2013 Information Technology Master Plan - June, 2009 5-year IT Master Plan, in part responding to Westin report
City of Placerville rate schedules - For comparison and perspective
Note: Placerville's rate increases involve urgent need to replace aging infrastructure, much of its pipes in the ground are 60 - 70 years old.
All web-accessible Comprehensive Annual Financial Reports:
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999

Metrics in graphics:
Major cause: Near-total loss of new construction (water agency hookup fees) SCWA presentation
EID Debt Service, Net Revenue, and Total Revenue, 1990 - 2008
EID Debt Service and Net Revenue as percent of Total Revenue, 1990 - 2008
EID rate increase history 1992 -2010 Maximum increase: 62.4% for wastewater in 1999 7.8% for wastewater (1.8% over last 9 years)
Regional water bill comparison source: EID, updated 1/28/2010 to show new EID rate
Selected water rates, including a few samples from other parts of California, updated 1/28/2010 for new EID rate proposal
Comparison of EDH (EID) and Placerville rates, water and wastewater combined, updated 1/28/2010 for new rate proposal
EID ratio of employment to service, from EID presentation at Feb 4, 2010 Proposition 218 public hearing. Currently at 243 employees.
EID Employee Count, 1999-2010, showing minimum/median/maximum in each year. (Source document from EID)
EID Total Employment, 2003-2008, from Table 32, 2008 Comprehensive Annual Financial Report [cited incorrectly in Al Vargas' comments]

Charts and Graphs from EID 2008 Comprehensive Annual Financial Report
Operating Revenue	Nonoperating Income	Operating Expenses	Nonoperating Expenses
Total District Collections	Equivalent Dwelling Unit Sales	Water Sales	County Population vs. Unemployment
Water Supply and Demand	Water Account Growth	Recreation Visitor History

Metrics related to ability to pay higher rates:

Local median household incomes
Local unemployment rates
California counties' median household incomes, highlighting medians for El Dorado County and the state as a whole

-- El Dorado County has the 12th highest median household income in California, with 11 counties higher and 46 lower.

-- El Dorado Hills median household income ($113,927) would rank third highest in the nation
among cities with a population of at least 40,000.
EDH is nearly tied with Danville California ($114,064) for second. First is Potomac, Maryland at $128,936.
City of Sacramento rate increases: Clipped from http://www.cityofsacramento.org/finance/budget/documents/02-BUDGET_OVERVIEW.PDF

This is an example of why fact-checking from authoritative sources is essential.
At the EID Prop 218 public hearing a member of the public asked why EID needed a higher rate increase when Sacramento needed only a 2% rate increase. This observer recalls the reference being specifically to the City of Sacramento. However, the City of Sacramento's actual proposed rate increase was 25% in each of two consecutive years (2009 & 2010) for water,
15% in both years for sewer. The rates adopted at Sacramento's Proposition 218 hearing reduced the increases to 19% and 19% for water, 10% and 12% for sewer. Sacramento's Prop 218 hearing occurred on May 27, 2009.

An additional excerpt from City of Sacramento documentation shows its rate history from 1997 to 2007. Sacramento's water rates increased by 6% in each year from 2000 through 2005, then by 9% in 2006 and 2007. Its sewer rates increased by 3% in 2000, 4% in 2001, and 6% in each subsequent year through 2007.

Among the 14 water districts in Sacramento County there could be one that increased rates by only 2%, but so far we have not found it. One tip that it could be the San Juan Water District proved to be incorrect, San Juan increased its rates by 7% on January 1, 2010. Another candidate, Sacramento Water Agency Zones 40/52, increased 19%.

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