Dual rate hikes proposed for Placer County water users

Published: Monday, Jul. 22, 2013 - 12:00 am | Page 1B
Last Modified: Monday, Jul. 22, 2013 - 7:01 am

A large swath of Placer County residents along the Interstate 80 corridor will see a double-digit increase in their water rates over the next two years under a proposal being considered by their provider.

Placer County Water Agency officials say the proposed hikes – 9.1 percent in 2014 and 3.7 percent in 2015 – are in response to a sharp increase in what they pay for water from Pacific Gas and Electric Co.

The rate hike affects 32,000 customers in what is known as Zone 1, an area east of Roseville through Auburn. Additionally, as a bulk water customer, the city of Lincoln is expected to pass along at least some of its additional costs to residents.

The water agency board is expected to take action on the proposed rate hike at its Aug. 8 meeting.

If enacted, the additional costs, starting Jan. 1, for average water users are expected to be around $6 a month in winter and $8.35 a month in summer, officials said.

"The impetus for the rate hike is an increase in our wholesale cost of water from PG&E," said Joe Parker, the water agency's director of financial services.

A portion of the $4.8 million in additional revenue that would be raised by the rate hike would be used to fund other agency expenses, officials said.

It would be the agency's first price increase since 2009.

For 45 years, water has flowed from the Sierra snowpack into a network of streams, passed through a series of PG&E hydroelectric generators and made a few stops at mountain reservoirs before it was practically given to the water agency serving Placer County.

The water is about to get a lot more expensive.

A new agreement, still being finalized with PG&E, triggers a twentyfold increase, from $200,000 for as much as 100,000 acre-feet of water, to $3 million in 2014 and $4 million in 2015.

The contract allows for annual adjustments based on inflation between 2016 and 2018.

While officials from both agencies note that the price charged by PG&E has been frozen since 1968, PG&E's 2015 price is three times the old price's inflation-adjusted value of $1.3 million.

PG&E spokesman Paul Moreno said the new negotiated rate is "within the range" of what others charge for wholesale water.

"The new rate will help improve the reliability" of the system, he added.

Under the arrangement, PG&E redirects mountain tributaries into a series of company-owned pipes, open canals and reservoirs that guide the water through a series of hydroelectric power plants before connecting at various points to the Placer water agency's treatment plants and distribution network.

Before the change, PG&E electricity customers paid nearly the full cost of maintaining the system, Moreno said.

Now, water customers will share those costs.

The system suffered a major interruption in 2011 when a 40-foot section of canal broke after days of heavy rain, putting the county in a significant water bind as crews raced to fix the 6-foot-deep canal.

PG&E officials told the media and government regulators that the section of canal that failed had recently passed a visual inspection.

But their official report to regulators noted that an area just a few yards away needed repair.

PG&E maintains that a landslide caused the failure, not the other way around.

PG&E offered no specifics on what repairs or upgrades will be done with the additional revenue.

Water agency officials said the two sides were far apart when negotiations started. They said they considered litigation or asking state regulators to intervene, but decided both actions would be costly and would not ensure the outcome they wanted.

Parker, of the Placer County Water Agency, said that if rates had climbed steadily increases would seem less shocking to customers.

"Given that we haven't had a rate increase since 2009, it's not that much," he said.

Officials in Lincoln, which is a wholesale water customer, say they are likely to pass on some or all of their additional water costs to customers.

The Lincoln City Council is set to discuss the results of a rate study and likely will initiate a rate hike of its own at an Aug. 6 meeting.

Call The Bee's Ed Fletcher, (916) 321-1269. Follow him on Twitter @newsfletch.

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