Frequently Asked Questions – Proposed Water Rate Changes

Quick List of Questions:

  • What are the proposed standard rate schedules?
  • What is the proposed hydroelectric rate?
  • What is the proposed drought rate schedule?
  • How do I protest?
  • When will the proposed rate increases take effect?
  • Why raise water rates now?
  • Why are rates set so far into the future?
  • What is the Water Rates Cost of Service Study and what are its key findings?
  • What happens if the water rate change is not adopted?
  • What is NID doing to help manage costs?
  • Are any proposed or current capital projects going to be funded by rates?
  • Do you provide low income assistance?
  • What can I do to reduce my water bill?
  • Are you considering any rebate programs?

What are the proposed rate schedules?

Both treated (residential) and raw (irrigation) water customers would see changes to their standard water rates under the proposed rate structure. For a small number of raw water customers, an additional hydroelectric rate adjustment is applicable. Customers will also be subject to a drought rate schedule if the District’s Drought Contingency Plan needs to be enacted.

What the rate change means to your water bills depends on many variables, such as the type and amount of water used, as well as meter size and tier category. Customers can reference the proposed rate schedule tables to see what the increase would amount to based on their unique attributes.

Click here for the proposed rate schedule tables.

If you have questions or need assistance reading the tables, NID customer service staff can assist you. Call 530-272-6185 or email customerservice@nidwater.com

What is the proposed hydroelectric rate?

There are a small number of individuals served by the District who divert water for the purpose of generating power. Providing raw water to these individuals for this purpose results in increased operating costs for the District to monitor, patrol, track, and report on these activities. Under the new rate schedule, these individuals would pay the base rate and 10% of the volumetric service charge for raw water customers.

What is the proposed drought rate schedule?

Helping customers conserve water and save on their water bill is a value of the District. Conservation efforts on behalf of both customers and the District are also a crucial way to stretch our limited supply and be responsive to the effects of climate change and future drought. However, reduced consumption also means reduced water sales and decreases to the District’s projected rate revenue. Consideration of this reality is thus a necessary part of factoring base rates, particularly in light of the District’s proposed rate structure that only collects 50% of the fixed costs through fixed charges, leaving the balance collected through volumetric service charges.

When the District is subjected to mandated conservation measures or for other reasons declares drought stages as defined in the District Drought Contingency Plan, the District incurs additional costs. These costs include additional conservation programs such as education, public outreach, and monitoring, as well as purchasing of additional water supplies for customer use. The proposed drought rate schedules vary between treated and raw water customers; amounts are dependent on the Stage (severity of drought) declared.

Click here for the proposed drought rate schedule tables.

How do I protest?

There is a protest process for people who are not in favor of the increased rates. A majority of customers would have to submit a written protest by or during a public forum (date to be announced). Only one protest per parcel is permitted and must be filed by an owner or tenant, and not both.

Written Protest Requirements:

  • A description of the property (such as address and/or parcel number) sufficient to identify the property.
  • A signature of the property owner or tenant.
  • If the protest is submitted by someone whose name is not listed on the water bill or on the last equalized county assessment roll for property ownership, written evidence should be provided that the protest is submitted by a tenant of property owner.
  • To be counted, the written protest must be mailed or delivered to the Nevada Irrigation District, Attn: Customer Service, 1036 West Main Street, Grass Valley, CA 95945 at or before the conclusion of the public hearing.

If the District receives written protests representing a majority of the affected parcels, the proposed rate increase will not be implemented.

Click here to learn more about Prop 218 requirements.

 When will the proposed rate increases take effect?

If adopted on April 24th, the new water rate schedules would go into effect starting May 1, 2019. All subsequent increases would be effective on and after January 1 of each year from 2020 through 2023.

 Why raise water rates now?

NID’s 100-year-strong history has been due to the forward-thinking and prudent approach of the District’s long-term planning approach. The Water Rate Cost of Service Study demonstrated a need for the District to adjust rates commencing budget year 2019 in order to collect adequate levels of revenues to meet a fiscally responsible budget. The increased ratepayer revenue will go towards the District’s safety-net reserve fund, which must include enough cash on hand to cover six-months of operating expenses in the event of an unforeseen emergency. A healthy reserve fund also is needed to supply working capital for critical infrastructure improvements, maintain a good credit rating, and generally follow sound financial management practices.

Implementing a rate increase now also allows for the District to take a scaled approach to the needed adjustments. The 2019 rate change proposes that rate payer revenues gradually increase from 68% to 77% of actual costs over a five-year period to lessen the annual impact of rate increases.

proposed-5-year-rate-change_web

Why are rates set so far into the future?

A multi-year rate structure provides several benefits such as:

  • Precluding the need to revisit the Proposition 218 process more frequently
  • Reducing administrative costs associated with the rate change process
  • Allowing customers to anticipate and plan for future costs more accurately

What is the Water Rates Cost of Service Study and what are its key findings?

The Water Rates Cost of Service Study provides the basis for determining the rate structure that will best serve the needs of the District and services it provides. The report was produced by an objective third-party consultant and involved a comprehensive analysis of the District’s water rates, including fairness and equity in the rates, revenue sufficiency, and the adequate funding of reserves.

Summary of Water Rate Cost of Service Study’s Key Recommendations:

  • Change from bi-monthly to monthly billing cycle, allowing for more timely identification and response to customer needs.
  • Continue subsidizing the District’s water budget by using $34M of Hydroelectric Division revenues, $8.2M of interest earnings, and $6.9M from non-operating revenue to keep rates low for all customers.
  • Gradually increase rate payer revenues from 68% to 77% of actual costs over a five-year period to lessen the annual impact of rate increases.
  • Secure $500,000 of non-fee revenue to support low-income families with a new lifeline rate program.
  • Adjust the base rate in order to improve revenue stability and overall financial health of the District.
  • Implement a drought/conservation rate schedule to offset revenue losses during mandated and/or emergency conservation measures.
  • Apply revised water rates for small hydroelectric generators to help cover the District’s costs incurred from providing extra services to these individuals.

Click here to view the Water Rate Cost of Service Study.

 

How Projected Revenues meet Revenue Requirements in 5-Year Rate Structure Recommendation

projected

What happens if the water rate change is not adopted?

Without increased revenues from customers, the District is at risk of several consequences that could impact future service reliability and the financial standing of the District. Ratepayer revenues go directly toward contributing to the cost of water service, which includes operating and maintaining a sustainable, reliable, and cost-effective water system. Customers have been able to depend on NID to provide a consistent supply of clean, safe water for residential and irrigation needs for nearly 100 years because the District plans for the long-term.

We are seeing increased climate and regulatory impacts that must be proactively addressed. For example, NID experienced approximately $8M loss over past 5 years due to drought reduction of revenues. It is not a matter of if, but when the next drought cycle occurs, and the District must be prepared. The water rate proposal implements a drought rate structure to prepare the District financially for mandatory conservation.

Increased customer revenues are also needed to ensure the District builds and maintains reasonable reserves for handling emergencies, funding working capital, maintaining a good credit rating, and generally follow sound financial management practices. It is in our community’s best interest to care about the District’s ability to maintain an adequate debt service coverage, for example, in order to avoid having to pay higher interest rates on money borrowed to maintain, repair and renovate our facilities.

What is NID doing to help manage costs?

District customers have benefited from exceptionally low water rates for many years, primarily because both raw and treated water rates have been subsidized with other revenue and reserve funds from within the District. Currently, the cost of water for customers is reduced by 32% because of millions of dollars of District subsidies from hydroelectric revenues, non-operating reserves, and interest earnings. The 2019 rate proposal reflects the District’s efforts to help keep rates as low as possible for customers with $49 million of continued subsidies over the next 5 years.

NID also works hard to make its operations efficient and minimize the need to increased cost for customers.

The 2018 Financial Efficiency Report, released on Nov. 28, 2018, indicated due to staff efforts the District realized $4,036,894 in cost savings and additional revenues for 2018. Since the inception of these efforts in 2014, the District has realized $22,239,582 in efficiencies.

Here are examples by Department:

Finance, Human Resources, Administration

  • Purchasing reductions over 23 vendors: $60,562 savings
  • IT realized software & phone system discounts: $16,200 savings
  • Watershed project used staff vs contractors: $38,922 savings
  • Watershed net proceeds on timber sales: $14,682 revenue
  • Safety Insurance premium reductions: $569,070 savings

Engineering

  • Staff reduction: $96,000 savings
  • CEQA exemption on Maben project: $210,000 savings
  • Staff vs consultants on design and construction management compared to industry: $1,682,605 savings

Operations 

  • Reduced energy consumption through PG&E: $3,404 savings
  • Staff vs consultant on water rights analysis: $25,000 savings
  • Equipment trade-in program for 14 PLCs: $140,000 savings
  • State Water Resource Control Board fee reduction for Smartsville Water Treatment Plant: $100 savings
  • Decommissioned Cascade Shores Water Treatment Plant: $88,476 savings
  • Staff reorganization efforts: $5,679 savings

Maintenance

  • Replacement vs repair of service lines: $45,000 savings
  • Rebuilding vs replacing fire hydrants: $24,000 savings
  • Staff vs contractor on Oest siphon project: $120,000 savings
  • Staff vs contractor on nine projects: $136,300 savings

The Financial Efficiency program began in 2014 and has achieved cumulative efficiencies of $22,239,582.

In addition, the District has been recognized for exceptionally sound and transparent financial practices. For example, NID has earned the Excellence in Financial Reporting Certificate of Achievement for its Comprehensive Annual Financial Report (CAFR) in 2017, 2018 and 2019, which was judged by an impartial panel to meet the high standards of the program. According to the Finance Officers Association of the United States and Canada, this award is the highest form of recognition in the area of governmental accounting and financial reporting, and its attainment represents a significant accomplishment by a government and its management.

Are any proposed or current capital projects going to be funded by rates?

No, capital projects that include activities like facilities expansion and new infrastructure are funded separately (not from water rates) through property tax revenues, bonds, and capacity fees.

Do you provide low income assistance?

The District recognizes that low-income customers face unique financial challenges. To help support these families and lessen potential hardship from rate increases, the 2019 rate proposal includes $500,000 on non-fee revenue to support a new income qualified lifeline program. Adoption of the rate change proposal will initiate development of this program, so details of how it will work and how low-income customers can apply for the benefit are yet to be determined.

What can I do to reduce my water bill?

Conservation is the key to reducing your water bill. There are many simple things customers can do to reduce water usage and waste.

Water Conservation Tips

  1. Reduce the length of showers
  2. Install low-flow toilets and shower heads
  3. Do not irrigate landscaping in the middle of the day
  4. Fix leaky toilets
  5. Irrigate landscaping for the shortest time possible without jeopardizing plant health
  6. Set irrigation systems to reduce overspray
  7. Replace manual irrigation valves with automatic valves.

Click here for more conservation tips.

Water Efficiency Information Tool:

Customers are also encouraged to use online water calculators assess their water usage. The tool provides information on what water uses in your home are efficient and which are not, along with simple conservation tips that save water and energy. Click here.

Are you considering any rebate programs?

Yes! Conservation is an important value of the District and we believe strongly in supporting customers with their conservation goals as well. While there not any rebate or incentive programs currently sponsored by the District, we are researching and exploring viable options to propose in the coming year.

We also encourage customers to take part in incentive and rebate programs offered by the manufacturers and government agencies. incentives or rebates are currently offered by manufacturers or agencies:

Energy Star Rebates

Save Our Water Turf Replacement and Toilet

 

 

 

 

 

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