We get it – paying more is never fun, especially when the cost of living is as high as it is in Napa County.
But sometimes not spending a little more now is a recipe for spending a lot more later.
Such is the case with the current water rate increase proposed by the city of Napa.
City Council has approved a major revision of the rate structure, setting a base fee for all water customers, depending on the size of their water connection pipe, and creating new tiers for actual water used, based on 1,000-gallon “units.”
And there is no denying it – the cost will go up. The cost of a bill for a typical home, using about 5,000 gallons of water per month, will rise from the current $28 to $35 next year, and on to $47 by 2022.
Partly (but by no means completely) this is a perverse effect of the drought, when Napa residents rallied to the cause and cut water use dramatically. That, in turn, drove down water sales, which depressed revenue for the water system. That means higher rates for everyone.
This is because utilities such as the city water system are supposed to be self-sustaining. Rates are set, basically, by taking the costs of operation and dividing it by the number of water users and the amount of water produced.
The problem is that water systems have an enormous fixed cost, costs that can’t be cut when revenue goes down. The city’s three treatment plants need constant staffing and maintenance, no matter how much water is being produced and sold. The city’s 350-miles of pipe and network of tanks need to be maintained and repaired constantly, drought or not.
There are some savings from reduced demand, of course, including the ability to slow down long-range expansion plans, but there is no way for a water system to cut back on its fixed costs enough to make up for decreased demand without seriously compromising reliability and safety.
But a large part of the rate increase is driven not by the drought at all, but by the simple fact that the city’s water system is old – parts of it were built in the 1880s, with major additions during boom cycles in the late 1940s and the 1960s. And as with so much public infrastructure in the United States, we have never devoted all the dollars to maintenance that the system needs.
Until just a few years ago, the system spent only about $1 million per year on maintenance and upgrades. Lately it is about $3 million per year. That sounds like a lot until you realize that the system would need about $9 million per year in maintenance and upgrades to stay in optimal shape.
The new rate structure approved by the city will have two important effects.
First, it will gradually raise the annual budget for upgrades and maintenance to about $6 million – still far short of the optimal figure of $9 million, but a dramatic improvement nonetheless.
Second, by establishing a fixed fee, it will build in a financial cushion for the water system in the next serious drought. A short-sighted change in the water rate structure in the 1990s made the water system too dependent on the revenue for water sales, which amplified the financial disruption of lower consumption in the recent drought. The base fee in the new rate structure will help the water system pay for all that expensive fixed cost even in times when water sales decline.
Yes, we will be paying more for water under the new rates, but taken as a whole, the new rate structure seems like a necessary step. By raising the budget for maintenance, we avoid costly emergency repairs for failing pipes and equipment. By creating a more stable funding stream, we will minimize price spikes for future droughts.
Water is a critical element of our modern society. You expect that when you turn on the tap, clean, safe water will come out, no matter what time of day or what day of the week. That kind of reliability is expensive. If we don’t pay the appropriate price now, we will live to regret it later.