In December, customers of the El Dorado Irrigation District received a notice from EID that signaled significant rate increases for water, wastewater and water recycling services.
The notice generated an angry response from many ratepayers and community groups and caught the interest of the local media. EID regrets that these proposed rate hikes coincide with a bad economy, high unemployment, and an uncertain financial future for many people, families and businesses in the communities we serve.
We are a public agency dedicated to providing high-quality water, wastewater treatment, recycled water, hydropower and recreation services in an environmentally and fiscally responsible manner. We strive to provide the safe and reliable utility services our customers deserve at a price they can afford. We also work diligently to ensure that EID meets or surpasses all federal and state laws and regulations regarding the operation of a water and wastewater utility.
We held four public workshops over the past month to listen to our ratepayers, and our board and staff have participated in many meetings with community groups. We have heard both support for and opposition to the proposed rate increases. It is the degree of opposition, however, that led the district to take another look at our financial situation.
Since December, the district board of directors and staff have worked together to further reduce operating expenses; negotiations with our employees are addressing benefits and other personnel costs. We are also negotiating better prices for the hydroelectric power EID produces. We are delaying capital improvement projects wherever possible, and we have found a way to restructure the district’s debt – all with the intent of reducing the impact of the proposed rate increases on our customers. As a result of these actions, district staff presented the EID board of directors with a “Plan B” on Jan. 25 that cuts the 35 percent rate increases proposed for 2010 by about half – to 18 percent or lower. Information on “Plan B” is available on the district Web site at www.eid.org. We encourage customers to attend a public hearing tonight, when the board of directors will consider the rate increase proposals.
The proposed rate increases were originally contained in the revised 2010 calendar-year budget the board adopted in late November 2009. Our budgets must show sufficient revenue projections to cover operating costs and debt payments, plus net revenues that exceed debt service costs by 25 percent.
These are legal requirements in our bond covenants, but also sound business practices relied upon by well-run utilities.
It is clear that the proposed rate increases are driven in part by the requirement to cover our debt costs. The level of borrowing would not have been needed if past boards had instituted a rational, long-term plan to replace and maintain our aging 1,300 miles of water pipelines and 600 miles of wastewater collection lines, our 21 water pump stations and 64 wastewater lift stations, our five water and three wastewater treatment plants, our 22.3 miles of high Sierra canals and flumes that deliver water to all EID customers, the dams that store the water and our security systems to protect these assets from human acts and natural disasters. The current board has reversed that neglect, but the investment required to replace and maintain district facilities comes at a heavy cost.
Measured by the original costs, the district is the steward of $840 million worth of in-the-ground assets. Of course, it would cost much more to recreate those assets today. For the past eight years, this board has insisted on a capital improvement plan to replace and maintain that infrastructure. Our customers shouldn’t have to accept costly and lengthy water outages if treatment plants and pipelines fail through neglect. The district appreciates our customers for their many suggestions, as well as voicing their criticisms regarding the proposed rate increases. We know our customers live busy lives, and we understand that they rely on us to operate the district in a safe and reliable manner. We will work with them to regain the faith that they may have lost in our ability to fulfill our commitment to them.
We regret the upheaval caused by the proposed rate increases. The board will consider the proposals at the public hearing tonight. Please note that to accommodate a larger number of customers, we moved the hearing to the El Dorado Adventist School gymnasium, 1900 Broadway, in Placerville. The starting time is the same, 6 p.m.