Board raises rates and may raise them more after further study.

By a 4-1 vote on February 27, the Board raised the $9.00 per share per month Service Availability Charge to $12.90 starting March 1.  The Board will get more information from the rate consultant before making a decision about whether and how much to change volumetric rates for consumption.

The increase in the Service Availability Charge will cause a substantial percentage increase in bills to customers who use small amounts of water.  For example, one who has 3 shares (which is average) and uses no water outside the house will probably consume about 5,000 gallons per month, which is 5 billing units.  Presently, that customer’s monthly bill would look like this:

  • Service Availability Charge                $27.00
  • Volumetric charge at $2.85 per unit     14.25
  • Total                                                    $41.25

With the new Service Availability Charge of $12.90, this customer’s total monthly bill will be 28 percent higher at $52.95 ($38.70 + $14.25).  Customers who use more water will have smaller percentage increases because a larger fraction of their bills will be based on volume consumed.

The rate consultant, Raftelis, recommended increasing the Service Availability Charge to $12.90 for three reasons:

  • First, our current $9.00 per share charge raises only 22% of total revenue, which is at the bottom end of the 20-35 percent range of fixed charges in the industry. At $12.90 per share, 26 percent of Crestview’s budgeted revenue will come from the fixed charge.
  • Second, the concept of a fixed monthly charge is that the seller has fixed charges that have to be paid every month regardless of the quantity of water delivered. Such expenses include staff compensation, communications and office utilities, insurance, depreciation, customer fees charged by Fox Canyon Groundwater Management Agency, Calleguas Municipal Water District, and SoCal Edison, etc. The current $9.00 per share charge is far short of enough to cover all our fixed expenses.
  • Third, basing more of our revenue on a fixed charge and less on the volume sold, makes the company less vulnerable to annual and seasonal rainfall fluctuations.

In addition, the Board considered four volumetric rate increase scenarios between 9 percent and 17 percent. All would result in Crestview rates below rates currently charged by Cal-American, City of Camarillo, Pleasant Valley MWC, and Camrosa. This issue was tabled and will be considered again after receipt of further analysis by Staff and Raftelis.

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