Rate classes reaffirmed

By Michael Raffety

Mountain Democrat 5-9-14

In November 2011, the El Dorado Irrigation District Board of Directors adopted the Cost of Service study and approved switching from allocating 30 percent of rates to a base charge and 70 percent to commodity usage. The vote then was 4-1, with Director George Osborne voting no.

Last month on April 28, the board voted 3-2 to uphold the rate classes that arose from the Cost of Service study. Osborne voted yes this time along with Directors Bill George and Dale Coco, who had placed the issue on that agenda.

Voting no were Director Greg Prada and Board President Alan Day.

The vote in 2011 came after a 15-month Cost of Services study by rate consultant Greg Clumpner of HDR Inc. and a community-based panel of five local volunteers appointed by the board, including Prada, and five district staff members.

Coco requested April 28 that the board “reaffirm the approved rate classes with the understanding that the eligibility requirements for the Small Farm rate class are to be strengthened to support agricultural pursuits.”

“A great deal of time and effort and money were expended and a great deal of time by the board and staff … I’m comfortable with the rate classes,” Coco said. “We’re spending an inordinate amount of time on rate classes.”

“What’s the purpose?” asked Day. “It seems we are revisiting this issue every meeting. Time to move on and not keep debating rate classes.”

“Director Coco is asking, with the new members of the board, to affirm (the rate classes),” said George.

“It is known there will be a change in the criteria for the Small Farm (rate),” Osborne said.

“The EID Small Farm category was created a dozen years ago before Prop. 218 applied to water districts. This rate is not a cost-driven rate. It is a political rate,” Prada said. “I didn’t want these ‘non-farmists’ climbing into the agricultural boat. There were 200 in the Small Farm rate and we now have 720. I’m convinced it is not legal.”

“This whole thing smacks of the old boy network,” said Cameron Park resident Joe Fuller.

“They (Small Farm rate users) live in gated communities,” said Jon Jakowatz, who lives in the gated community of Four Seasons in El Dorado Hills. “They are horse farms and watering big front lawns. They are Johnny-come-latelies.”

Jakowatz was referring to Greenstone Country, which extends from Green Valley Road to Lotus Road.

Craig Schmidt, who operates an olive tree planting consulting business called Greenstone Growers, told the board the name referred to green olives and their pits. He pointed out there were 1,400 on the Domestic Irrigation rate and 200 on the Small Farm rate when the DI rate was discontinued at the end of 2013, and that “720 is only half the number of farms before.”

“We’ll have a workshop (on the Small Farm criteria) and I suggest we do it at night,” Osborne said.

“There were some real farmers in Domestic Irrigation,” said Rainbow Orchards owner Tom Heflin, who was on the Cost of Service study committee.

Marion Reinhardt told the board she was on the Small Farm rate. She and her husband had apple trees and had planted olive trees “to make olive oil” and help supplement their retirement.

Wine grape grower and COS study committee member Doug Leisz pointed out that 87 percent of Sly Park was to go to agriculture when it was built. “There are excellent small farms. Be very careful as you approach this.”

In response to comments from Day, Leisz said, “Be careful you don’t damn the whole class. They met the criteria. That’s the finest Cost of Service study I’ve seen EID produce. Don’t throw the group out without very careful consideration.”

Merv DeHaas, who retired as county Water Agency manager and had worked 27 years for the U.S. Bureau of Reclamation, said, “You better not destroy that Cost of Service study. Sly Park was authorized in 1949 as a Central Valley Project with 12 1/2 percent domestic use. The Bureau of Reclamation developed irrigation projects. EID sold water to Rancho Murieta to pay for Sly Park. It was decided to build a single system (for ag and domestic use). The Health Department kept raising the standards. Over the years the cost of providing water had gone up to serve domestic customers. That’s what caused the disparity in the Cost of Service. We support the Cost of Service study. You ought to affirm this rate structure and move on.”

“We, as farmers, the one thing we don’t want to worry about is the rate going up. We constantly worry some about change in the rate structure,” said winery owner Greg Boeger.

“I think there was a lot of energy expended. I have a lot of concerns about the Cost of Service study and Small Farms,” said Day, who then called for the vote.

In a related matter, Osborne had asked General Manager Jim Abercrombie to clarify some issues raised by Prada in letter to the editor published in the Mountain Democrat April 11.

“Director Osborne indicated that he did not recall any Small Farm rate decreases (37 percent as alleged in Prada’s letter) in the last several years unless they were associated with a change in the district’s cost recovery methodology,” the report said. That cost recovery change in 2012 was from the 30-70 rate structure to the current 50-50 division between base rates and commodity charges.

“The Small Farm base charges increased 83 percent, although the commodity rate decreased for all tiers. The commodity rate decreased 14 percent for indoor potable water use from 2011 to align with Tier 1 for the Residential class and decreased 17-37 percent depending upon tier to align with the Agricultural customer class structure,” Abercrombie wrote.

Prada wrote, “In turn, the acre-feet sold at the special $49 far-below-cost rate has surged to nearly 2,000 acre-feet.”

Abercrombie wrote, “The increase in water sold at the Small Farm rate is directly attributable to the increase in Small Farm customers following the elimination of the Domestic Irrigation category. In 2012, 390 Small Farm customers and 1,178 DI customers used a total of 2,738 acre-feet of water. In 2013, 717 Small Farm customers used a total of 1,923 acre-feet of water, or 2.7 acre-feet per service. The annual use of Small Farm customers has decreased from 2.9 acre-feet per service in 2012 to 2.7 acre-feet per service in 2013.”

Prada wrote, “EID’s $49 per acre-foot Small Farm rate has barely increased since 2008, while residential rates have skyrocketed to $829 per acre-foot.”

Abercrombie, noting Prada did not show how arrived at the $49 figure, wrote, “A better method is to calculate the customer’s annual bill as if they used 1 acre-foot of water. For simplicity, this calculation assumes equal usage in each billing period, although all customers use much more water from April through October, and much less water in the other months.”

With the 1 acre-foot basis, a Single-Family Residential customers would be billed $1,055 and a Small Farm customer $514 for the year.

“The primary basis for the difference is Principle 9,” wrote Abercrombie, “which was adopted as part of the COS study. This principle was unanimously agreed to by the COS committee and adopted by the district’s board by unanimous vote on Sept. 1, 2010. Director Prada was a member of the COS committee and voted for Principle 9.”

“Principle 9 recognizes that the district converted Ag customers from an open ditch raw water service to a piped system to conserve water, which directly benefited the district’s other customers. Among the benefits of this conversion is the 2010 long-term Warren Act contract authorizing the district to take up to 4,560 acre-feet annually of water from Folsom Reservoir from supplies that formerly served only agricultural customers via open ditches. This conserved supply now exclusively benefits and serves the district’s customers in El Dorado Hills,” Abercrombie wrote.

“I’d like to table (this item),” said Day. “We should not have staff spending time and money (on this).” To which Prada offered a second.

“The reason I asked is I believe the numbers (in Prada’s letter) are not correct. It sends a confusing message when published in the newspaper,” said Osborne. “If the information is handed out to the public it has to be accurate. I asked the staff to bring this forward.”

“All I ask is for the facts. I feel they were exaggerated (in Prada’s letter),” said George.

“I quoted statistics. It was dismissed. It was ignored,” Prada said. “I spent a lot of time finding out what’s not portrayed by staff. It’s not strictly an irrigation district. What’s quote, unquote, in the best interests of the district. It’s the ratepayers who keep the lights on. I ran on a different point of view. If I can’t get staff or a board majority to with me, OK.”

“I object to tabling,” said Paul Raveling. “Facts are not opinion.”

“Frankly, I pretty much agree with what Mr. Prada said,” said Joe Fuller of Cameron Park.

“I can’t resist. I agree there is distrust of EID,” said Tom Heflin of Camino. “This is just exactly the thing that feeds into the distrust of EID. I was appalled by that letter to the editor. This is the forum where this should take place.”

“It doesn’t make sense. I’d like to write things about the Planning Commission, but ethically it’s not right,” said Heflin, who is on the El Dorado County Planning Commission.

“It was an e-mail sent to a bunch of folks. It was not a letter to the editor,” said Prada.

The “folks” the letter was sent to included the editor of the Democrat.

“It would be good if we could get as much exposure for the drought as you did for your letter,” said Craig Schmidt.

“I’m not sure we shouldn’t go through the numbers,” said Director Coco.

“It’s inappropriate for a director to respond to the other director,” said Day.

The item was tabled on a 3-2 vote, with Osborne and George voting no.


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