Ken Petersen: Revisiting water rates labyrinth



A recent column by James de Bree, “Through the labyrinth of SCV water rates,” published Nov. 3, has likely created more confusion regarding current rate-setting processes for two local water agencies. Let me correct some misinformation, provide additional helpful facts and set the record straight.

Let’s start with drought, development and rates. The primary “driver” of the current three-year rate-setting process for both the Santa Clarita Water Division and Valencia Water Company is not to recover money lost from the recent drought, but rather due to the projected overall increases in the cost of providing high-quality water to residents.

These are fundamental future expenses, such as the cost of materials, power, chemicals we use to treat the water to meet strict state and federal health regulations and the fuel costs we face (just like everyone) for our service vehicles.

As the valley has grown in recent decades, the developers of new communities have paid and will continue to pay the costs of extending our water lines and installing new pumps to serve new homes.

Additional population that we serve from these new housing developments does not increase the per-capita costs of water – in fact, it has the opposite effect.

The severe drought did, indeed, cause the Santa Clarita Water Division to dip into reserves to avoid a rate increase, and it did trigger a temporary increase in the special surcharge rate for Valencia Water Company customers. In the case of Valencia Water Company, that surcharge is expected to be removed in 2019.

We also want to remind everyone that it’s Santa Clarita Water Division’s rates (not Valencia Water Company) that will increase an average of 4.3 percent per year for three years under their current proposal. Valencia Water Company’s revenues need to increase about 6.3 percent annually.

Importantly, the author attempted to calculate future Valencia Water Company bills by using formulas and methods that will either be adjusted or removed as a result of moving Valencia Water Company’s budgeting process toward a public-agency model versus a California Public Utilities Commission-regulated private company model. As stated earlier, the revenue adjustment surcharge is on track to be removed in 2019.

Second, it’s important to distinguish the actual dollar amount you may see on future bills versus the percentage increase. Treated water service is still one of the lowest bills of all utilities serving households.

The proposed increase to VWC’s overall revenue requirement is 6.3 percent in 2018, but the impact to each customer depends on his or her water usage and the size of the customer’s meter.

An average residential customer monthly bill for 17 CCF of water will increase by $6.25, which is 12.9 percent less than the proposed 2018 rates.

In 2019 that bill will decrease by $4, which is due to ending the Revenue Adjustment Surcharge, and the plan calls for an increase of 6.3 percent in 2020, which is $3.21. The average monthly increase for the three-year period is $1.82 per month, or 3.8 percent.

We recognize that as a Valencia Water Company customer, you may have questions about the structural changes in rates that will occur and how these changes will impact your future water bills. One of the changes includes the elimination of tiered rates to a single-quantity charge.

We are ready to answer questions and would welcome the opportunity to review anyone’s bill to show the customer exactly what he or she may be paying over the next three years.

Ken Petersen is general manager of Valencia Water Company.



Related To This Story

Latest NEWS