Tuesday evening, the Turlock City Council approved to move forward with seeking professional consulting services to assist in the preparation of a Water Rate Study. This analysis, once conducted, could result in water rate increases for the residents of Turlock.
The vote was not unanimous, however, Councilwoman Amy Bublak did not think it was fiscally responsible to spend roughly $50,000 on outsourcing a professional consulting service. Bublak, who has generally always favored in-house analyses conducted by City Staff, felt that it was not necessary to look for outsider consultants.
Municipal Services Director Dan Madden, however, stated that in regards to hiring professional consultants, sometimes you “get what you pay for”, insinuating that perhaps the cheapest option is not always the best option as it may not give the most accurate results.
Madden also emphasized the importance of needing to reevaluate the current water rate structure for residents, as there is a projected deficit of approximately $780,000 for the 2012-13 Fiscal year due to the mandated switch to meter-based billing.
In 2004, State Legislature passed a law requiring utilities to charge water customers based on the actual volume of water used. Water meter installations began in early 2007, and metered billing began in early 2011.
While the metered rate has shown a decrease in water usage, thus achieving the goal to conserve water, it has also shown a severe decrease in revenue.
Councilman Bill DeHart, who was appointed as Vice Mayor at Tuesday’s meeting, stated that there was a predicament with asking people to be responsible for their water usage and then also having to raise their rates.
“We fell into the same trap that every city in Southern California did,” stated Madden in response to Councilman DeHart.
Councilman Forest White pointed out, however, that the City of Turlock has one of the lowest rates amongst other Central Valley cities.
According to Turlock Municipal Code 6-5-501, for a 1” water service the charge is as follows: $2.00/month meter rental fee plus $22.05/month for water usage fee, thus totaling to $24.05. If the service size is larger the rental and usage fee increases. The volume allowed before the City of Turlock charges an additional $1.07/1,000 gallons is 20,600 gallons, which is derived from the usage fee of $22.05/$1.07 times 1000.
While the City of Turlock’s water usage fee is $22.05 a month, Councilman White pointed out that other cities, such as the City of Modesto and the City of Tracy, have a water usage fee that is over $50.
Because the City of Turlock’s water usage fee is so low for a large amount of water, it is simply not generating enough revenue to compensate for the costs affiliated with providing water.
“The metered rate for water was developed specifically for industrial and commercial users,” stated Madden. “When you apply that model to a residential user, who is using water to exist and not to generate revenue, it doesn’t work.”
Councilwoman Bublak suggested perhaps the City should lower the amount of water allotted, rather than raising the rate. While Councilman White agreed this might be a viable option, a professional water study would still need to be conducted to ensure that would be a valid option for the City.
The last water study was conducted in 2009, which Turlock Regulatory Affairs Manager Michael Cooke believed to have cost the City approximately $20 to $30,000. This study predicted that a deficit in revenue would occur due to the new-metered structure, and recommended that the City increase rates.
Although the City did not choose to increase rates at that time, after witnessing the $780,000 deficit due to the new structure, City staff believe another water study should be conducted to determine whether or not rates should be increased.
The Council approved for City Staff to move forward with accepting proposals from professional consultants, which is expected to take approximately three or four months to finish. Once City Staff begin accepting proposals from various professional consulting services, they will make a recommendation to the City Council as to which firm should be hired to conduct the study.