The Fallbrook Public Utility District board meeting of May 29 included a non-voting discussion item about the possibility of modifying FPUD’s tiered rate structure and monthly operations charge.
“It was just to give the board some options on various tiered rates and how that would impact average customer bills,” said FPUD general manager Brian Brady.
The discussion was not intended to influence FPUD’s 2013-14 budget. “The sentiment of the board was to have staff do more study during the coming year,” Brady said.
Prior to the implementation of the three-tiered system for 2008-09, Tier 1 water was charged at 85 percent of the base rate while Tier 2 supply was charged the base rate. In an effort to encourage conservation, Tier 3 was implemented which charged 110 percent of the base rate with the possibility of an even higher percentage of the base rate should mandatory cuts be imposed. The estimate at the time was that the Tier 3 rate would impact 20 percent of non-agricultural water sales.
The 2012-13 usage data indicates that Tier 3 rates account for 10 percent of FPUD’s domestic sales, 19 percent of large-lot domestic sales, 0 percent of commercial sales, and 1 percent of multi-family sales. Tier 2 accounts for 65 percent of domestic sales, 75 percent of large-lot domestic sales, 57 percent of commercial sales, and 14 percent of multi-family sales. Tier 1 rates are paid for 25 percent of domestic, 6 percent of large-lot domestic, 43 percent of commercial, and 85 percent of multi-family purchases.
A proposal which will be studied would change Tier 1 to 90 percent of the base and Tier 3 to 115 percent of the base. Under that scenario, for a 3/4-inch meter Tier 1 would change from $4.10 to $4.21 per unit, Tier 2 would be modified from $4.72 to $4.64 per unit, and Tier 3 would increase from $5.20 to $5.34 per units. A sample bill for 10 units would increase 1.4 percent from $77.63 to $78.73, the sample bill for 30 units would decrease 1.3 percent from $178.23 to $175.83, and the sample bill for 50 units would increase 2.4 percent from $296.63 to $303.63.
The calculations for changing the Tier 2 and Tier 3 thresholds did not involve altering FPUD policy that the district recover 75 to 80 percent of fixed costs through a monthly operations charge with water sales markup accounting for the remaining 20 to 25 percent.
The goal of the operations charge for fixed costs is avoid penalizing customers for saving water and thus reducing revenue to the district. The analysis presented May 29 also evaluated changing the monthly operations charge to 85 percent of fixed costs with 15 percent to be covered by sales markups. That would increase the charge for a 3/4-inch meter from $36.63 to $38.80. The decreased markup would result in rates of $4.00 for Tier 1, $4.60 for Tier 2, and $5.06 for Tier 3 while the sample bill for 10 units would increase 1.5 percent to $78.80, the sample bill for 30 units would decline 0.8 percent to $176.80, and the sample bill for 50 units would decrease 1.6 percent to $291.80.