Wednesday, April 23, 2014
PLACERVILLE, CALIFORNIA
99 CENTS

Water rates rolled back to 5% for 2014

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From page A9 | November 04, 2013 | 8 Comments

At its Oct. 28 meeting, the El Dorado Irrigation District Board of Directors approved a 2014 mid-cycle operating budget in the amount of $44.3 million. This budget reduces a previously-adopted rate increase of 11 percent for water services down to a 5 percent increase, effective Jan. 1, 2014. The previously-adopted rate increase for wastewater and recycled water services will remain at 5 percent effective Jan. 1, 2014.

“This proposed reduction in rate increases for water services is due to expense reductions related to the early implementation of the Public Employees Pension Reform Act (PEPRA), which the employees of the district agreed to over four years early; the delay of the forecasted bond sale for specific significant long-lived capital assets; and continued diligence by staff to contain costs,” said Mark Price, EID’s finance director. The district will also continue to stay on course with the financial plan built within the 2012 Cost-of-Service Study.

Projected 2013 revenues are expected to be about $1 million higher than originally budgeted, while projected 2013 year-end expenditures are expected to be slightly lower than the adopted budget, approximately $575,000.

Price reported that the newly-approved 2014 operating budget is approximately $400,000 less than the previously adopted 2014 budget but is 1.1% higher than the 2013 adopted budget. For more information on the budget, visit the  EID Website at www.eid.org or go directly to this link: http://goo.gl/YhBqJr.

Mary Lynn Carlton

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Discussion | 8 comments

  • Phil VeerkampOctober 30, 2013 - 12:36 pm

    Mary Lynn, help me understand how rate cuts can be supported on the back of FCCs, but rate increases cannot be used to mitigate FCCs - It seems a contradiction. Rates cannot subsidize FCCs. But FCC revenue can subsidize rates cuts? LINK - Staff explained their recommendation by noting the economy appeared to be recovering somewhat based on increases in revenue from new hookup fees(FCCs). It seems that you EID has "blinked".

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  • Phil VeerkampOctober 30, 2013 - 12:43 pm

    Mary Lynn - LINK - You’ve now been with EID for four years. What has surprised you most during this time period? - Abercrombie - "As a resident of El Dorado County and customer of EID for the past 22 years, it was well known that EID had to reinvest in its infrastructure and comply with government regulatory mandates, but I was surprised that the District had become over-reliant on facility capacity charges (FCCs)—also known as “hook up” fees, to pay off debt. Although there were some increases implemented periodically in the mid-1990s, there were several years in the late 1990s and early 2000s when there were no increases. It was not surprising that past Boards were reluctant to raise rates when hook up fees were plentiful, but with the recession, that strategy was not sustainable."

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  • Phil VeerkampOctober 30, 2013 - 12:49 pm

    Mary Lynn - question - "Can you give me some specifics about this cost-cutting?" Abercrombie answer - "Just prior to my arrival, the previous general manager had actually begun the process of reducing costs and cutting staff, as the recession caused a severe drop off in the income from FCC fees. As I mentioned earlier, this was problematic because the District had become dependent on FCC fees to cover debt. . . . " ~~~ http://www.eid.org/index.aspx?page=26&recordid=251

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  • Phil VeerkampOctober 30, 2013 - 12:56 pm

    Mary Linn - "In the past I have heard that the District implemented a new financial model to ensure its financial health. Can you tell me about that?" - Abercrombie - "The District is required by its bond covenants to annually have revenues exceed its operating expenses and debt service requirements for that year by 125 percent. The revenue consists of rate and hydroelectric revenue, property tax, and other non-operating revenue as well as FCCs. The new financial model that we have implemented internally, called the 1.0 test, requires the District’s revenue—excluding FCC revenue—exceed or be equal to its operating expenses and debt service. In other words, rate revenue (not counting FCC revenue) should pay for operating expenses and debt service expenses. By adhering to this rule, we should never get into the same predicament that we experienced before, whereby we were totally reliant on FCCs to cover our costs."

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  • Phil VeerkampOctober 30, 2013 - 1:02 pm

    OMG!!! Dred Prada has not even been elected and you guys are surrendering. You're climbing back on the FCC party train??? WTF!!! Can't you even remember back to September 6th 2013 when this was the wisdom, "By adhering to this rule, we should never get into the same predicament that we experienced before, whereby we were totally reliant on FCCs to cover our costs." - Jim Abercrombie to Mary Lynn Carlton ~~~~ sheesh!

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  • Phil VeerkampOctober 30, 2013 - 1:28 pm

    Mary Lynn - "Are there any other financial issues you are tackling?" - Jim Abercrombie - "Yes, we are reviewing and revising the new FCCs (hook up) fees to ensure that new development continues to pay for capacity expansion. In fact, once approved by the Board, the capital reserves in our budget will have a positive cash flow so that we pay for expansion of facilities from reserves instead of having to borrow funds. ~~~ Well now! What a reversal. FCCs are now immediate gratification to rate payers. We'll build that third transmission on borrowed funds anyway. But the rate payers will "gladly pay you Tuesday for a hamburger today."

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  • Phil VeerkampOctober 30, 2013 - 3:25 pm

    HEY EVERYBODY - Jim, George O., George W., John, Bill, Alan - Hey, West County (Diamond Springs, Shingle Springs, Cameron Park, EDH) needed a third transmission line in the works at least TEN YEARS AGO. Stand up and SAY SO! But I guess the rate payers will "gladly pay you Tuesday for a hamburger today."

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  • Charlie BrownNovember 04, 2013 - 8:14 am

    If the 2014 budget is 1.1% higher than 2013, why are the rates going up 5%? I would think 2.2% would be more than adequate, but what the heck do I know? I'm just a cartoon character.

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