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How Towns Cheat Water Ratepayers An Occidental Case Study


How Towns Cheat Water Ratepayers
An Occidental Case Study

By Bill Wadsworth, a ratepayer

Occidental’s governing board in the last year has paid 44% of our water rate dollars, more than $30,000, on fines and dubious actions actions. Now they are raising our rates to pay for these actions without correcting our rate’s unconstitutional problems. Is this happening in your community? To find out read on.

Issue 1. The California Constitution gives us the right to have equitable water rates. Occidental’s board has spent more than $15,000 this last year alone finagling to deprive us of that right. We, the water ratepayers, must pay this $15,000 in higher rates.

Issue 2. Occidental’s shortsighted board is unlawfully allowing home construction in Occidental when we fail to have full long-term water rights and it has been fined an additional $15,000. Again we pay for this unlawful support to developers with our rates as we take on the responsibility to provide the unlawfully added homes water for which we don’t have long-term water rights. This obligation will cost us more in the future.

Occidental water rate case study:

1. Occidental has unconstitutionally high monthly service charges (Residence = $44) and very low volumetric rates ($3.15 p/1,000). In 2006 the smallest ten users paid 18 times more for a gallon of water than the big ten, as the big ten used half of our water. Our board won’t provide the data for us to update the above comparison.

2. OCSD’s water permit requires our board to lower our monthly service charge considerably and raise the volumetric rate, which would correct this equity problem.

3. This would cause the big users to pay the true cost of the water they use, which will reduce our districts water use and help mitigate our waste treatment failures. 

4. Our board has not used our water permit for 8 years in order to avoid correcting our inequitable rates. Instead they have used water diverted under a temporary agreement with the Sonoma County Water Agency (SCWA) as SCWA supports unconstitutional water pricing.

5. Since 2008 our board has spent our water funds to submit around ten rate submissions and amended submissions in which they incorrectly allocated variable costs as fixed costs to inflate our service charge and the State Water Board has not approved these rates.

6. The State Water Board has threatened 4 times to revoke our permit due to nonuse and lack of due diligence regarding our board’s failed rate submissions. 

7. The new $39.67 service charge is based on bogus fixed cost allocations and doesn’t correct our unconstitutional inequity problem.

8.  When allocating our fixed costs using the American Water Works Association guidelines, OCSD’s service charge should be around $13.00, not $39.67.

9. The overly high service charge causes the small and average users to subsidize the few big residential and commercial users by a large margin due to very low volumetric rates. OCSD documents reveal that six of the top ten users are big residential users. 

10. Residential users have 2-tiered rates as our commercial users have only one tier.

11. Our water permit calls for OCSD to recover no more than 30% of its revenue from a service charge. The new rates will recover 50% or more. In fact, OCSD’s fixed costs actually run around 20% of our costs. Recovering any more than 20% from our service charge is not only unconstitutional but fails our water permit requirement. 

12. Occidental reports provided to the state reveal that three of our board members are among the top 9 big users. The board president’s residence is reported as the 7th largest user. Our inequitable rates cause us to subsidize these big-user’s hefty use.

13. Last year our board spent over $15,000 maneuvering to get the State Water Board to approve these new inequitable and, therefore, unconstitutional rates and they failed.

The American Water Works Association reports that their rate design practices would typically yield service charges, which are not more than $17. If your monthly service charge is above $17, than your water provider may be claiming certain variable costs as fixed cost, which is unconstitutional. AWWA’s M-54 Manual: Developing Rates for Small Systems can help you find the problems. In the spirit of Bernie’s Revolution don’t sit quiet as your power structure favors big water users at the expense of small users.



*EDITOR’S NOTE - I cannot verify this information - contact Bill Wadsworth for details & questions.