Thursday, April 20, 2006

Rebates and Water Rates

The city council is following up on promises they made the voters on water rates. When the water rate increase was passed, they said they would give a rebate once the fund balance (basically an emergency or contingency fund) reached a certain point.

The rate increase was very unpopular and contributed to some new council members being elected. The council looked at the water usage, rates, etc. and decided that they could do a refund as long as the balance would be completely healthy within 3 years. They also set in motion a twice yearly review process to determine if and how to give the rebate. In May the base rate will not be charged, which amounts to a rebate of about $350,000. If water sales continue like they have, expect another rebate like this toward the end of the year. It's good to see the city refunding the money beyond the cost of providing water to the users instead of quietly sticking it in the general fund. There is still a lot of work to be done, but it's a good start.

There was discussion about an additional discount for users of less than 3000 gallons of water a month. A 10% discount was on the table. It is proposed as an additional break on those low income/fixed income families. There are pro's and con's both ways.

The city already gives a break to the lowest water users. The rate for the first 2000 gallons is only $1.01, which is less than half of the $2.15 for the next 3000 gallons. That is quite a break. A person that uses only 3000 gallons a month pays $14.25 for the water and base rate. If water were charged at $2.15 for the first 2000 like it is the next 3000, the payment would be $16.53. Even with a 10% discount, the user would still pay $14.88 so the savings by the lower initial rate is 14% off the bill. It is even better for 2000 gallons or less where the savings is 16%.

So lets look again at the conservation discount of 10%. We are already giving more than a 10% discount to the low water users. If we tack on an additional 10% discount, we are giving the users under 3000 gallons an effective 22% discount. The question is how much discount do you give to the low water using customers? That question will be asked again at the next council meeting. The answer will be interesting.

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