Sacramento Bee on Wastewater Rates

Like a good reporter, Matt Weiser is skeptical of SRCSD claims about the magnitude of increasing wastewater rates in last week's Sacramento Bee.  However, if the Bee is looking for government agencies being dishonest about Sacramento wastewater rates, they should also investigate the claims of the regulator, the Central Valley Regional Water Quality Control Board.

The Sac Bee article about SRCSD begins

A letter hitting most residential mailboxes in the capital region this week offers startling information: It soon may cost three times more to flush your toilet.

That is, if you agree with the numbers

The article goes on to suggest that rates may not actually increase by $40, it looks like they could increase by 2.5 times instead of triple ($30 per month more rather than $40 per month), although there is a lot of uncertainty at this stage.  I agree with this, it probably won't be as bad as SRCSD is saying, although their scenario is not wildly exaggerated  (SRCSD would have to start weaving tales of thousands of homeless Sacramentans to approach the exaggerations routinely made by water exporters about regulatory costs). 

In the article, Central Valley Regional Water Quality Control Board staff also complain that the flyer didn't describe the environmental benefits from the upgrade.  That's a fair comment, but after reviewing many documents the Regional Board's staff uses to justify the upgrade, they are also guilty of producing one-sided analysis that fail to properly analyze the economic impact of their rulings on communities they regulate.  Even more bothersome is the way they misrepresent the small amounts of information they do present to justify the costs of upgraded treatment. 

1. The board's staff compares current rates in communities that they have already required to upgrade their plants to the projected rates in Sacramento.  It is an inexcusable apples to oranges comparison.  Many of the communities for which they cite current rates have recently approved large wastewater rate increases to pay for plant upgrades that have yet to affect current rates.  I am most familiar with Stockton which the regional board notes has monthly fees of $22.75.  However, Stockton just approved a large rate increase to pay for an upgraded plant that will nearly double wastewater costs between now and 2015 to around $40 per month.  Lodi is similar although they are already halfway through the 5-year process of roughly doubling rates.

2.  The board's states in reports and correspondence with Senator Steinberg and others that "other communities that have completed the plant upgrades and are operating the upgraded systems without irreparable economic harm."  Really?  That is a pretty strong assertion for which they provide no evidence, and have conducted no assessment.

It is almost certainly a false statement.  We have yet to see the full impacts of higher rates in most areas so any conclusion to this effect would be premature.  As one current example of a place where high wastewater rates have already hit, the City of Placerville just voted to increase sales taxes to subsidize increased wastewater rates that were hitting low-income residents hard.  While this has allowed them to off-load some of the costs on non-residents and reduce the regressive effect of the rate increase, their wastewater costs are now being paid from a revenue source that typically supports general fund services like police, fire, parks and libraries who will now be unable to use sales tax increases to offset cuts to these vital services.

3.  Most annoying to me, the Regional Board staff misrepresents Pacific's economic impact reports (most notably on page 39 of this report).  They do not cite the main result of the study, an annual employment loss of 976 jobs and annual income loss of $246 million over the next 30 years.  Strangely, the only thing they report is a conservative assumption that we made to facillitate the calculations, "increased wastewater rates will not be significant enough to affect the location, operation or investment decisions of businesses, and that lost corporate income flows outside the region." This is presented in a way to suggest that we disagree with the local building industry.  They left off the fact that we had clearly labeled this assumption as conservative and a reason why our impact estimate could be too low.  

I was surprised that they also cited our other reports on the effects of Delta problems on other stakeholders (Valley farms and salmon fishing), specifically citing the losses to income and employment that have been sufferred.  I would be pleased by that if they had reported the Sacramento impacts in the same way, but they don't.  If they did, it would show that the negative impacts on Sacramento for the proposed permit are actually larger.  [Note: I called CVRWQCB staff last week and offerred to explain how to properly report and interpret the results to our study and brief their board, but the call was not returned.]

I am not saying that Sacramento shouldn't make some upgrades to their wastewater treatment.  Maybe they should go as far as the Regional Board proposes, I can't say.  But neither can the Regional Board without making an honest, good faith effort to properly report and assess the economic impacts on both Sacramento and other cities affected by their previous rulings.