Notice of Proposed Increase in Service Charges for Water Purchased from South Feather Water and Power Agency
November 6, 2019
Dear Property Owner and/or Water Customer:
The Purpose of this letter is to advise you that the Board of Directors of the South Feather Water and Power Agency has proposed increasing your monthly service charge. Under the proposal, all Agency customers would experience a $4.00 increase in the monthly service charge. This notice will also advise you that the Agency’s Board of Directors will conduct a public hearing to receive comments and protests on the proposed change; on January 28, 2020, commencing at the hour of 2:00 p.m., located at 2310 Oro-Quincy Highway, Oroville, California.
Why is the increase necessary? South Feather Water and Power Agency’s rates to provide water have been kept artificially low. The current low rates assume a significant financial contribution from the generation and sale of hydropower each year through a power purchase agreement with Pacific Gas & Electric Company. Unfortunately, over the past nine years, hydropower revenues have not met forecasted expectations. Some explanations for the decrease in revenue include:
- Federal and State policies encouraging alternative energy sources, specifically solar and wind power, resulting in less demand for hydropower and lower prices for the energy produced.
- Dam safety and regulatory license requirements have significantly increased costs to the Agency.
The basis of the proposed changes in service fee.
A substantial amount of hydropower revenue is required to finance the capital requirements of the Agency, including water treatment, storage, and distribution system repairs and operation and maintenance of infrastructure. A portion of the revenues from the South Feather Power Project can be used by the Agency to offset the cost of delivering water. From a customer’s standpoint, this means that hydroelectric revenues provide funds to the Agency which it can use to offset the cost of its water operations, making it ultimately less expensive to Agency customers.
The proposed change in service charges reflect a rate for water use which is still far below the cost of producing and delivering water because these costs will continue to be subsidized with revenue from the Agency’s hydroelectric facilities. The remaining balance of hydroelectric revenues must be used to finance the Agency’s capital expenses, including the costs of the hydroelectric system, the Federal Energy Regulatory Commission License and to maintain required reserves.
The amount of the proposed increase.
The service charge for Potable Water (domestic treated water) will change from the current $15.00 to $19.00 per month.
The service charge for Non-Potable (irrigation water) will change from the current $17.50 to $21.50 per month.
The flat rate account service charge for Non-Potable (irrigation water) will change from the current $56.50 to $60.50 per month.
Reason for the proposed change in service fee.
The Agency’s Board of Directors has determined that the rate for water service be closer aligned with actual operational costs. Article XIII D, section of the California Constitution, approved by the voters as Proposition 218 in 1996, mandates, among other things, that the Agency charge its customers no more the cost of the service to deliver water. The Agency is fortunate to have a hydropower subsidy to keep its water rates below its actual cost of service. However, due to declining hydropower revenue, the Agency is proposing that the amount of the subsidy be reduced by $4.00 per month per customer account.
How does the service fee increase benefit me?
The proposed increase in service charges helps the Agency to continue as a viable independent, not-for-profit special district governed by board members chosen and elected by the community. The proposed increase in service charges will help reduce the reliance on hydropower revenue as California continues to migrate towards mainstream solar.
The Agency’s Board of Directors will conduct a public hearing regarding the proposed service fee change at 2:00 p.m. on January 28, 2020, at the Agency office located at 2310 Oro Quincy Highway, Oroville, California.
You have a right to protest the proposed changes. Oral protests will be heard at the public hearing described above. Written protests will also be considered at that time. Please be advised that if written protests actually received by the Agency prior to the close of the public hearing represent more than 50% of owners or customers subject to the Agency’s rates and charges, then the Board will not implement the proposed change. Only written (not oral) protests will be counted for this purpose, and only one protest will be counted for each parcel. Written protests should be directed to the Agency at the following address:
South Feather Water and Power Agency
2310 Oro Quincy Hwy
Please contact the Agency office at (530) 533-4578 should you desire further information with respect to the proposed change in rates.
RATH T. MOSELEY