The cost of water for customers of South Feather Water and Power Agency (SFWPA) will be less in 2012.

The average homeowner receiving water from SFWPA will pay $100 less in 2012 as a result of action taken recently by SFWPA’s Board of Directors. Beginning January 1, the cost of treated water will drop from 64¢ per unit down to 53¢ (a unit is 100 cubic feet, or 748 gallons). The rate will drop again in 2014 down to 42¢, and then again in 2017 down to 35¢.

For many years, SFWPA has been subsidizing the expense of treating and delivering water to its customers. The Agency will spend $2.62 million in 2011 for this purpose, with only $2.2 million being billed to customers. Revenue from the sale of electricity has been used to make up the difference. The reduction in rates that will go into effect in 2012 will reduce water-sales revenue and, by 2017, about $1 million of power revenue annually will be used to subsidize water treatment and delivery expenses.

Jim Edwards, SFWPA’s Board President, explained that the rate reduction was made possible by the increased revenue that is now coming from a new power purchase agreement between SFWPA and PG&E. He said, “We’ve been planning this change in rates for several years now, and are excited to finally be able to reduce the cost of water for our customers.”

SFWPA’s rate structure that has been in place for over two decades has two tiers. Customers are charged 64¢ per unit for up to 100 units of water consumed (748,000 gallons). The price then drops to 25¢ per unit for all consumption beyond the first 100 units. The new rate structure will drop the price for the first 100 units from 64¢ in three stages down to 35¢ in 2017 (53¢ in 2012, and 42¢ in 2014). At the same time, the second-tier price will increase in three stages from 25¢ to 35¢ per unit in 2017 (28¢ in 2012, and 31¢ in 2014). By the time the third stage is implement in 2017, customers will pay only 35¢ per unit, regardless of the amount they consume.