The Santa Fe Irrigation District Board of Directors will hold a Public Hearing regarding proposed rate increases starting at 8:30 am on May 19, 2016. A majority of the Directors have indicated their intention to vote in three years of rate increases that range from 23.2% to 46.8%, while over 30% of single family residences will receive a -4.6% decrease.
At the April 21st Board meeting, the preliminary FY 2017 budget was presented. What follows is a discussion of the troubling flaws in the COSS analysis that have direct impact on the District’s ability to raise the revenue claimed in the 8-page “Notice of Public Hearing” mailed out April 1st.
*Blue rates are less than rates set four years ago
Tier 2 - - The new tier 2 cut-off number of 37 hcf is based on the “projected bi-monthly amount of water historically available (ten year avg.) in Lake Hodges”. But, for two of the three Fiscal Years of this rate increase, SFID reveals there will be only 800 AF of local water available in 2016 and 2017. SFID projected in their Cost of Service Study that 3268 AF of local Lake Hodges water would be available for each of Fiscal Years 2016 – 2020.
Tier 3 - - The new tier 3 cut-off number of 165 hcf is based on the average summer Single Family bi-monthly use. However, it is an average of all single family homes in the District. Averaging the very small lots with the properties of numerous acres, favors the smaller lots in the western service area, rate-wise.
Let’s zero in on the actual cost of water, per hcf, as set forth in the COSS Rate Proposal:
- Cost of Service Study designed rates based on local water now admitted to not exist. The current COSS states 2832 AF of local water available for each of the three years. Now we are told only 800 AF of local water will be available this year and next. The proposed rates sell water for 74 cents/1 dollar that SFID must then purchase for 2.75!
- A combined total of $2,513,975. in additional water costs for FY 16 & FY 17 results from the grossly over- estimated local water availability in the COSS. $2,513,975. It is anyone’s guess what amount of local water will be available for FY 2018, the third year of the proposed increases.
The 2006 COSS, by the same Financial Consultant, noted: “The local water supply in Lake Hodges is not always reliable due to drought and hydrological conditions. During years in which local water is in limited supply, the District must purchase a greater percentage of its potable water supply through SDCWA. Because local water supply is considerably less expensive than imported water, the District’s water supply costs are subject to large fluctuations from year to year. To help minimize these impacts, the District has built up a rate stabilization fund to prevent its customers from having to face large rate increases during years of limited local water supply”. COSS January 2006.
The previous two COSS blended the price of water - local Lake Hodges water and imported water - increasing revenues during high rainfall periods. When the financial analysts decided not to blend the local and imported rates in this 2016 COSS, the result was a 4.6% decrease for over 30% of the small-sized lots in the western service area and a cost escalation of over 2.5 million.
Question: How will SFID make up the $2,513,975. cost escalation created by their flawed rate structure? Where will they get revenue to offset the -4.6% rate decrease for over 30% of their single family customers when the District’s revenue requirements are 9% + 9% + 9%? Where? You…you and your neighbors.
Turn in a Written Protest Form by May 18th. Act Now.