Utilities Rate Advisory Commission Meeting - December 15, 2011

The Utilities Rate Advisory Commission met on December 15, 2011, at 6:33 p.m. to discuss proposed rate adjustments and alternative rate scenarios for water and wastewater services. The commission heard a detailed presentation from Department of Utilities staff and consultants, received public comments from residents and business representatives, and deliberated on next steps ahead of a public hearing scheduled for January 25, 2012.

Consent Calendar

• Approval of Minutes for November 14, 2011: The commission unanimously approved the minutes from the previous meeting.

Public Comments & Testimony

• Joan Barden (lifelong Sacramento resident): Expressed concern about the impact of rate increases on elderly, disabled, and low-income homeowners, noting that her entire Social Security goes to her mortgage. She urged the commission to consider a sliding scale or assistance program and invited commissioners to the Oak Park Neighborhood Association meetings.
• Michael Fowles (Sacramento Business Coalition): Representing 27 business organizations, he requested that the commission slow down the process to allow for more detailed analysis. He called for an independent review of infrastructure deficiencies, a comprehensive financing plan with limited use of debt, and a clear project timeline. He also noted the city's general fund is approaching its debt capacity and expressed concern about shifting debt to the utility enterprise fund.
• Kevin Green (Downtown Sacramento Partnership): Asked for more information on commercial rate impacts and strongly recommended that the city council redirect the 11% general fund tax on utility rates back to infrastructure projects.
• Greg Hatfield (IN Sacramento): Warned the commission not to be a rubber stamp and urged listening to the community. He expressed concern that the three-year rate proposal is a “foot in the door” for long-term bond debt, and questioned the necessity of some capital projects given the relatively low leak rates shown in utility maps.

Discussion Items

• Proposed Rate Adjustments and Alternative Rate Scenarios: Staff presented a three-year rate proposal (water: 10% per year; wastewater: 16%, 15%, 14%) along with alternative scenarios (delaying best practices, delaying the water treatment plant, and a “do nothing” path). Consultants explained the trade-offs between pay-as-you-go and debt financing, emphasizing that debt allows for intergenerational equity. The commission discussed the potential for future rate increases beyond the three-year period, the possibility of a balloon payment (which staff said does not exist), and the impact of labor contract assumptions. A key concern was the 11% general fund tax on utility revenues, which some suggested should be redirected to capital projects. The city attorney clarified that the commission can recommend such a change but that the tax is voter-approved and subject to council discretion.
• Request for Additional Information: Commissioners asked for more detailed data on the impact of rate increases on different business types (top five categories) and a comparison of Sacramento’s replacement schedules to those of similar older cities (e.g., Kansas City, St. Louis, Boston). Staff agreed to provide this information at a future meeting.

Key Outcomes

• The commission will hold an additional meeting before the January 25 public hearing to review requested data and continue deliberation. (Staff will work to schedule a date.)
• Chair Archibald announced his intention to step down as chair at the next meeting, asking commissioners to consider a new chair.
• The commission’s final recommendation to the city council is expected after the January 25 hearing, with the council vote likely in February 2012 and rates effective July 1, 2012.