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The City Council should reject the “water rate” study

San Juan Capistrano City Councilman Roy Byrnes. Courtesy of the city of San Juan Capistrano
San Juan Capistrano City Councilman Roy Byrnes. Courtesy of the city of San Juan Capistrano

By Roy Byrnes, San Juan Capistrano City Councilman

Like you, I’m deeply concerned by the high cost of water.

On June 17 our City Council will consider a proposal to again raise the costs of water. I urged the council to reject it. Big mistake. I can assure you that the rate study we have just received does not come close to meeting the standards of adequacy.

Here is why this is true.

A valid rate study should include a serious evaluation of all costs: product (in our case, water), personnel and distribution and operational costs. Indeed, cost containment, including strategies for cost reduction, should be the starting point of any legitimate rate study.

Amazingly, the rate study we’ve been given totally ignores cost cutting or even cost containment. It’s merely a shopping list of spending projects that we’re expected to blindly approve.

In a legitimate rate-structure analysis, the last thing one considers doing is raising prices. The new city rate structure starts with unsubstantiated revenue increases. This is unacceptable. We have just finished a five-year series of water price increases totaling 49 percent. Now we are being asked to approve yet another five years of revenue increases totaling 30-plus percent.

Many of our residents have suffered through the worst recession in decades and have seen their incomes diminish with zero increase in salary and retirement checks. Yet, we are now considering increasing the cost of water far beyond the rate of inflation or consumer price index. We must not do this. We must find ways to reduce non-essential city services and city employee costs. We must find better ways to do the job at less cost. Until I can see progress toward governmental cost control, I cannot in good faith vote to levy an additional burden on our public.

About Proposition 218: California law mandates that our city must not be seen to be profiting or marking up its charges—no “hidden taxes.” This simple injunction has spawned a complex, legal structure that has a life and form of its own. That’s why the city hired a specialized firm for this rate study. I did not support that move because I knew that it was just a bureaucratic excuse for jacking up fees. After innumerable meetings and shelling out over $140,000, I am proven to be correct. We don’t even have a rate structure study in the accepted business sense. What we have is a complicated bureaucratic document designed to satisfy the arcane, legalistic requirements of some future Prop. 218 trial.

The “rate study” we’re being asked to approve is actually a traditional governmental bureaucratic “supermarket maneuver.” Here’s how it works: Go on a shopping spree at Trader Joe’s. Pull off the shelf anything that looks good—French champagne, sirloin steak, Russian caviar, etc. Never mind cost because when you get to the checkout cashier, the citizen ratepayer will be forced to pay. He has no choice since he must purchase water from us.

This approach satisfies Prop. 218, which only cares that we produce evidence that we actually spent “X” millions. Remember years ago when we learned that the government was paying $600 for toilet seats? It’s the same distorted mentality at work here. I reject this approach. It’s wrong. It’s time to get back to common sense business fundamentals.

But wait a minute. We’re being asked to increase revenue 5 percent per year for five years—for a total of over 30 percent compounded—in order to “create a surplus?” I disagree. In my view, a legitimate surplus is the result of efficient management in which operating costs are controlled and income exceeds costs. Reaching into the public’s pocket and just pulling out more money because 50 percent reserve sounds good is not prudent management. If I have my fist in your pocketbook and I like the sound of “50 percent reserve,” why can’t I just pull out more of your money and call it “100 percent reserve?” Wouldn’t that make me appear to be super-efficient manager?

I hope you can see why this rate study is not valid. Years ago, this was called “voodoo economics.” It victimizes the public. I see my job on this council as to be a reasonable advocate for the customer. Therefore, I cannot support this faulty rate study. It has too many weaknesses.

Roy L. Byrnes, M.D. is a 55-year resident of San Juan Capistrano. He was elected to the City Council December 2012. Byrnes previously served on the council from 1972 to 1976, including two years as mayor. From 1959 until his retirement in 1994, Byrnes was a certified pathologist, working with physicians, clinics and hospitals in Orange County. Byrnes was also an associate clinical professor of pathology at UC Irvine.

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comments (1)

  • Dr. Brynes, you begin by saying “Many of our residents have suffered through the worst recession in decades and have seen their incomes diminish with zero increase in salary and retirement checks. Yet, we are now considering increasing the cost of water far beyond the rate of inflation or consumer price index.”

    You are correct about the “worst recession in decades,” but you over look the fact that we are in the grip of an extended drought ranging from severe to exceptional. Exceptional drought is the highest severity classification; resulting in widespread crop and pasture loss and shortages of well and reservoir water, leading to widespread water emergencies.

    If you don’t believe we are in the midst of a serious drought, I suggest you take a look at the Landsat photos of Lakes Powell and Mead, taken annually since 1985. The lakes are less than a third their 1985 size. Water levels have been dropping at about 10-feet per year.

    Our situation is considered to be the most problematic of any state, according to Brad Rippey, a U.S. Department of Agriculture (USDA) meteorologist. “Reservoirs which are generally fed by the Sierra Nevada and the southern Cascades” are in trouble because of diminishing annual snow pack. “Restrictions on agricultural water use has forced many California farmers to leave fields fallow,” [and] “At the current usage rate, California has less than two years of water remaining.”

    According to city staff and the council majority, the water rate increases are necessary because of expected bumps in the price of water imported by the Metropolitan Water District (MWD), which supplies most of south Orange County. If this drought continues at the exceptional level, the results will be catastrophic. Simply stated, as water becomes more scarce, its cost will increase.

    The MWD is the largest supplier of treated water in the US. The district covers primarily the coastal and most heavily populated portions of Southern California, and it supplies water to approximately 18 million people in its service area.

    The MWD moves water from the Sacramento-San Joaquin River Delta, via the California Aqueduct to southern California. Once the California Aqueduct reaches southern California, it is split between the West Branch, storing water in Castaic Lake for delivery to the west side of the Los Angeles metropolitan area, and the East Branch, which delivers water to the Inland Empire and the southern and eastern parts of the Los Angeles Basin. It also receives water from the Colorado River Aqueduct.

    According to recent reports, “MWD should get about two million acre feet per year (MAF/Y) from the State Water Project (SWP) and 1.35 MAF/Y from the Colorado River Aqueduct,” but according to Wikipedia, “the SWP allotment is rarely met, if at all, due to restrictions on the amount of water that can be pumped from the Delta. A minimum freshwater flow has to pass through the Delta in order to prevent salinity intrusion from San Francisco Bay, and the removal of freshwater from the Delta has also threatened multiple species, such as native chinook salmon.”

    San Juan Capistrano currently draws 43% of its water from the San Juan Basin via the GWRP. “The normal flow of this aquifer (under gravitation) is down the course of the river from its sources to the ocean and out to sea. It is a dynamic system with a variable flow depending on droughts and precipitation. Recharge consists of streambed percolation from the mainstream San Juan and Arroyo Trabuco Creeks, rainfall infiltration and subsequent deep percolation to the water table, deep percolation of applied water from landscape and agricultural irrigation, and subsurface inflow from the tributary alluvial stream areas.”

    Until recently, the major stressors to our water supply have been the drought and runaway population growth. Our water situation has become somewhat more complicated in recent years with the state’s promotion of hydraulic fracturing (fracking) in the Kern County area. Hydraulic fracturing can consume between three and five million gallons of water per frack. A well can be fracked up to 18 times, raising the water consumed to between 54 and 90 million gallons. Multiply this by 1,000 new proposed wells, and the water consumed rises to between 54 and 90 billion gallons.

    Any way you look at it, if this drought continues, the cost of our water is going to increase astronomically.

    There are things we can do to mitigate some of this. First we can send a message to Sacramento by banning fracking within our city limits. I suggest the following resolution be enacted:

    “The people of the City of San Juan Capistrano have a right to clean air, pure water, and to the preservation of the natural, scenic, historic and esthetic values of the environment. San Juan Capistrano’s public natural resources are the common property of all the people, including generations yet to come. As trustee of these resources, the City of San Juan Capistrano conserves and maintains them for the benefit of all the people.

    “Therefore, it is resolved that the unconventional well stimulation technologies known as hydraulic fracturing (fracking), hi-rate gravel packing, and acidizing used to produce oil and gas from shale formations are permanently banned within the city limits of San Juan Capistrano, California and its adjacent ocean waters within the City’s jurisdiction.”

    It is time we send a clear message to Sacramento that we will not stand for our water supply being decimated by the oil and gas cartels. Please note that many other cities, counties and states have, or are in the process of, passing their own version of the above ban.

    Next, each of us must assume responsibility for the water we use by actively seeking out and implementing ways to conserve water.

    More importantly, we must learn to work together, because if we don’t, the situation will only get worse. To quote Thomas Hobbes, “the lives of future generations will become nasty, brutish, and short.”

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