Santa Cruz making water wasters pay

05/09/2014 12:00 AM

05/08/2014 10:38 PM

The municipal water utility in this city, home to wide beaches, sun-kissed weekend getaways and evocative alternative scholarship, just got tough. Last week it started rationing water – for nonfarmers, the most draconian response to date to California’s debilitating drought.

The message to customers: Use more than your allotment, and it will cost you. A lot. Water bills below the allocation run $40 or so. Go above it, and fines pegged to the amount of excess water used will quickly double, triple or quadruple that bill.

“We live in a state where water supplies that are there 100 percent of the time, with 100 percent of reliability, don’t exist,” said Toby Goddard, the administrative services manager for the Santa Cruz Water Department. “It would be shortsighted of a utility to sell all it has to you now and not have anything for you a year out.”

Santa Cruz, whose fresh water comes from the shrinking San Lorenzo River and a small reservoir, has gone further than other strapped utilities in embracing the idea of rationing, with fines for those who exceed their allotted shares. But other utilities around the state now have a tiered pricing system. Basic water use comes cheap. Consumption that is compatible with modest landscaping comes at a slightly higher cost. Excessive use comes at premium prices.

California’s utilities, like the East Bay Municipal Utility District near San Francisco or the Eastern Municipal Water District in Southern California’s sprawling Inland Empire, use their bills to drive home the ethic of conservation. “Thirty years ago, everybody took costs and divided by anticipated sales and found an average rate,” said Tim Quinn, the head of the Association of California Water Agencies, or ACWA. “We haven’t lived in that world for over 30 years.”

The message irritates some people, particularly those with mansions surrounded by lush lawns and ornamental plantings. One person was playing golf with Quinn at a Monterey country club recently. When he learned that his golf partner worked in water services, the man complained bitterly about his $5,000 monthly bill.

In some places, that message has become more personal. Starting about two decades ago, in water districts in Southern California like Irvine Ranch and San Juan Capistrano, rate-setters decided that the fairest way to encourage conservation was to assess how much each individual account needed and then to set tiers.

This process of water “budgeting” is now in place in 20 of the more than 700 California water districts, and it is spreading fast.

But water budgeting, known in the industry as “allocation pricing,” may violate California law, which requires that the cost of a government service like water delivery be based on the cost of providing the service.

And its cousin, tiered pricing, has suffered a legal setback. In August, an Orange County judge ruled that San Juan Capistrano’s water agency had not sufficiently tied its establishment of water tiers to the cost of serving those tiers.

Raftelis Financial Consultants is working with the agency to establish a legally defensible link between the newly adjusted tiered pricing and the cost of providing pipes, water storage and other services.

“The water industry in the past has been hidden – people didn’t know where they got their water,” said Raftelis manager Sanjay Gaur. “Now, because of the drought, things are going to another level. People are going to pay more attention.”

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