1. PROPOSAL TO ADJUST CURRENT WATER RATES Goal: Address frequently expressed concerns of citizens  Simplicity  Understandability  Fairness  Liability Risk

2. FIVE PARTS OF THE PROPOSAL  Remove the Supply Charge “Look Back”  Supply Charge Based on 12 months, not 6  Reduce Fixed Meter Fee by Additional 19%  Use Two Tiers for Variable Use Fee  Prop 218 Notice in Fall Proposal affects all 3 Components of the Bill

3. BILL COMPONENTS There are 3 Bill Components : - Distribution Charge - Supply Charge - Variable Use Fee

4. FIRST BILL COMPONENT Supply (“Wet”) Charge  Must generate revenue to pay for fixed known infrastructure costs to: Build the water plant, Drill wells, Construct above ground storage tanks, and Replace meters.

5. PROPOSAL - PART ONE Remove the Supply Charge “Look Back”  Pay As You Go Bill each month for actual water use Pay for your own water use, not for those living at the property the previous May – Oct.  No money carry over  Familiar …  The Way It’s Always Been Done, Pay As You Go

6. PROPOSAL - PART TWO Supply Charge Based on 12 months, not 6  Water will cost the same regardless of when you use it  Advocated for by Measure P supporters  Advocated for by Davis Enterprise  Provides Resilient/Sustainable Revenue

7. EFFECT ON THE SUPPLY CHARGE Proposed Supply Charge  Calculated each month as $0.22 X 12 per ccf used = $2.64 per ccf Current Supply Charge  Calculated as $0.32 X 12 per ccf used = $3.84 per ccf, but only for the May to October months (with no charges for November through April), but paid for over 12 months, but not this year … the following year. We believe this is an improvement

8. SECOND BILL COMPONENT Distribution (“Dry”) Charge  A fixed charge determined by meter size, for administrative costs such as billing, fire protection, and the potential to supply water.  For a 3/4”meter for a typical SFR it's $8.25/month  The bigger the meter, the greater the water capacity, and the higher the charge.

9. PROPOSAL - PART THREE Reduce Fixed Distribution Charge by 19%  Moves volume-related meter replacement costs into Supply Charge  Lessens fixed fee burden for all  Helps Equalize the Cost Burden between low and and high volume users

10. THIRD BILL COMPONENT Variable Use Fee  Covers volume driven costs like electricity for pumping, and chemicals for water treatment.  Currently it is calculated to be $0.86 per ccf … with no tiers

11. THIRD BILL COMPONENT Variable Use Fee  Covers volume driven costs like electricity for pumping, and chemicals for water treatment.  Currently it is calculated to be $0.86 per ccf … with no tiers Let’s talk about tiers

12. PROPOSAL - PART FOUR Two Tiers in Variable Use Fee First Tier and its Effect  Current fee = $0.86 per ccf  Proposed Tier 1 fee = $0.50 per ccf  Tier 1 includes 20 ccf per living unit  Reduces Cost of Low Volume Water  Reduction of $0.36 per ccf produces a per month savings of $7.20 at 20 ccf

13. PROPOSAL - PART FOUR Two Tiers in Variable Use Fee Second Tier and its Effect  Proposed Tier 2 Fee = $1.90 per ccf for use greater than 20 ccf per living unit  Incentive to Conserve  Immediate Reward for Efficient Use  Does not penalize large families  2.25 ccf per person (State standard)

14. PROPOSAL - PART FOUR Two Tiers in Variable Use Fee So Why Use Tiers? Why Charge the amounts we propose? Why Set the Cut-Off at 20-21 ccf? The graphical examples that follow are for Single Family Residential accounts organized by increasing annual water use.

15. Each Group below represents 10% of the SFR accounts

16. Looking at the highest Water use Group

18. Four Way Picture Progression from Bartle Wells (in yellow) to CBFR (in red) to this proposal (in green)

19. PROPOSAL - PART FOUR - SUMMARY Two Tiers in Residential Variable Use Fee  Equalizes Cost Burden Better Equity for Low Volume Users  Incents Conservation  Tier Break is high at 21 ccf  Does not penalize large families  PROTECT THE TIER BREAK at 21 ccf

20. ONE CHALLENGING ISSUE Variable Use Fee Tier Cut-Offs A key issue is how to fairly charge Commercial users, as well as users whose primary purpose is irrigation. Irrigation-Only customers should pay their fair share for the water they use, and yet if their water is priced too high they might leave the water system. So we'd like to carefully and proportionally set prices in order to keep an incentive for them to stay in the surface water system and continue to pay a share of the cost.

21. THE CONSUMER’S PERSPECTIVE

22. CALCULATING BILLS Proposed Supply Charge  Calculated each month as $0.22 X 12 per ccf used = $2.64 per ccf Current Supply Charge  Calculated as $0.32 X 12 per ccf used = $3.84 per ccf, but only for the May to October months (with no charges for November through April), but paid for over 12 months, but not this year…the following year. It is a pain in the but.

23. CALCULATING BILLS Proposed Supply Charge  Calculated each month as $0.22 X 12 per ccf used = $2.64 per ccf Current Supply Charge  Calculated as $0.32 X 12 per ccf used = $3.84 per ccf, but only for the May to October months (with no charges for November through April), but paid for over 12 months, but not this year…the following year. It is a pain in the but.  Which one would you choose?

24. CALCULATING BILLS There are 3 Bill Components : - Distribution Charge - Supply Charge - Variable Use Fee

25. CALCULATING BILLS Adding the Components Together: Calculation of monthly Bill without tiers: Distribution Charge by meter size, plus $2.64 per ccf Supply Charge, plus $0.86 per ccf Variable Use Fee = Total Water Bill Calculation of monthly Bill with proposed tiers: Distribution Charge by meter size, plus $2.64 per ccf Supply Charge, plus $0.50 per ccf 20 = Total Water Bill

26. PROPOSAL - PART FIVE Prop 218 Notice in Fall  Democratic  Mitigates any possible legal risk  Inexpensive  Strong Message to Lenders  Plenty of Lead Time prior to 1/1/2015

27. PROPOSAL REVIEW  Remove the “Look Back”  Supply Charge Based on 12 months, not 6  Reduce Fixed Meter Fee by Additional 19%  Use Two Tiers for Variable Use Fee  Prop 218 Notice in Fall Taken all together all three parts of the bill have been modified. We believe we have addressed the frequently expressed concerns of citizens.

28. WHY DO ANYTHING?  We believe this is a better rate structure It is more responsive to consumers It is more equitable It is simpler and easier to understand It is fiscally resilient and sustainable It is the result of democracy in action It reduces the community’s fiscal risk

29. WHY DO IT NOW?  Addresses Citizen Concerns  Measure P Supporters’ “Fairness” definition  Liability Risk identified in Ballot Statement